The National Association of Realtors recently released their forecast of key housing indicators for this new year, so we take a quick look at what they may actually mean for you:
Inventory has continued to tighten through last year, and is still expected to through the first part of this year, but by late summer or early fall we should begin to see inventory decreases finally reverse course. Home builders are expected to produce 7% growth in single family home starts, and that should help us reach a point where we actually see inventories begin to increase again later in the year – great news for buyers!
Sales and Price Growth
That 7% growth in new single family home building should translate directly into a 7% increase in new home sales. And the NAR is projecting 2.5% growth in existing home sales, as the inventory crunch starts to ease. For comparison, last year we saw only 0.4% increase in existing home sales because of the shortage of available listings.
Inventory is directly tied to prices, so as we see inventory increase, price appreciation will finally slow. Prices are forecasted to grow 3.2% this year, a slowdown from roughly 5.5% year-over-year price growth in 2017. The slowing is expected to be weighted toward the higher priced homes, though, with entry level properties still seeing bigger gains (as there are more buyers in that range and still limited inventory).
The NAR is predicting that the rate for a 30 year fixed will average 4.6% over the year, but reach 5% by year end. This has a lot to do with the economy overall, but if things go as expected, it’s no shock that buyers who act sooner will be the ones taking advantage of the lower rates we still have for the moment.
So the big picture? With an increase in homes on the market over the second half of the year, and some slowing of price increases, we’ll be trending toward a more balanced market this year, and see conditions that will give much-needed help to homebuyers over 2018 and into 2019.
We hope you have a great year, and that whatever your Real Estate goals or needs may be in the new year, you remember that we’re here for you. Give us a call today!