It’s no secret to brokers that the housing market has seen some short supply. The National Association of REALTORS® (NAR) recently reported a down of 10.4% from last year in the national inventory for pre-owned properties, but according to realtor.com® 2018 National Housing Forecast, groundbreaking is projected to increase to up to 3 percent, with single-family units going up to 7 percent.
Activity is expected to kick up later in the year with many builds being mid-high priced. Javier Vivas, director of Economic Research for realtor.com, commented that “We are forecasting next year to set the stage for a significant inflection point in the housing shortage…Inventory increases will be felt in higher-priced segments after home-buying season [in the fall], which limits their impact on total sales of the year.”
The forecast also shows that home prices will increase in 2018 by about 3.2 percent, and existing home sales are expected to grow 2.5 percent to 5.60 million. Gains in prices will be seen throughout areas such as California, Colorado, and Florida.
Realtor.com also projects that 43% of new home buyers in 2018 will be millennials, a 3 percent increase from the 40 percent projected for 2017. The forecast also states that mortgage rates are expected to grow and possibly reach a 5 percent average by year-end. The Federal Reserve and economic factors will precede the rise, and more first-time homebuyers were able to get a Federal Housing Administration mortgage this year than last. According to Freddie Mac, the 30-year, fixed mortgage rate currently averages 3.92 percent.
“As we head into 2019 and beyond,” Vivas says, “we expect to see these inventory increases take hold and provide relief for first-time homebuyers and drive sales growth.”