National inventory levels predicted to see positive growth
The lack of available housing has fueled a sharp rise in home prices and made it difficult for buyers to gain a foothold in the market. This trend will begin to ease next year as part of broad and continued market improvements, according to the realtor.com 2018 National Housing Forecast released Tuesday, Nov. 28, realtor.com.
Next year, home prices and existing home sales are forecast to increase due in-part to inventory increases compared to 2017. Additionally, mortgage rates are expected to reach 5 percent by the end of 2018 due to stronger economic growth, inflationary pressure and monetary policy normalization in the year ahead.
A news release detailed the 2018 Top Housing Markets (based on largest sales and prices gains):
1. Las Vegas-Henderson-Paradise, Nevada
2. Dallas-Fort Worth-Arlington, Texas
3. Deltona-Daytona Beach-Ormond Beach, Florida
4. Stockton-Lodi, California
5. Lakeland-Winter Haven, Florida
6. Salt Lake City, Utah
7. Charlotte-Concord-Gastonia, North Carolina – South Carolina
8. Colorado Springs, Colorado
9. Nashville-Davidson–Murfreesboro–Franklin, Tennessee
10. Tulsa, Oklahoma
It is expected that Southern cities will beat the national average in home sales growth in 2018. Tulsa, Oklahoma; Little Rock, Arkansas; Dallas; and Charlotte, North Carolina; lead the pack in sales growth.
Dallas was also recently ranked the ninth fastest-growing metro in the U.S. based on rising homeownership levels.
“We are forecasting next year to set the stage for a significant inflection point in the housing shortage,” said Javier Vivas, director of economic research for realtor.com, in the release. “Inventory increases will be felt in higher priced segments after home buying season, which limits their impact on total sales for the year. As we head into 2019 and beyond, we expect to see these inventory increases take hold and provide relief for first-time home buyers and drive sales growth.”
The release included five housing trends for the coming year:
— Inventory begins to increase
— Slowing price appreciation
— Millennials gain market share in all home price segments
— Southern markets will lead in sales growth
— Tax reform is a major wildcard
The release also shared the forecast for six key housing indicators:
Housing Indicator Realtor.com® 2018 Forecast
Home price appreciation 3.2% increase, enabling a sales pickup
Mortgage rate Averaging 4.6%, reaching 5.0% (30 year fixed) by end of year
Existing home sales 2.5% growth, low inventory trend starts to reverse
Housing starts 3% growth in home starts; 7% growth in single family home starts
New home sales Increase 7%
Home ownership rate Stabilizes at 63.9% after having bottomed in Q2-2016