Heading into the back stretch of 2017, analysts predict more of the same for the 2018 housing market – moderate economic growth, solid job gains and low mortgage interest rates.
Same old, same old – or is it?
Could new construction rev up the housing market wrapping up the second decade of the 21st Century?
Economists say low supply is driving high prices right now, but homes are selling fast; continuing to average 30 or fewer days on the market.
Some potential buyers have acceded to the sticker shock, but in most markets, they’ve shown a willingness to spend more.
Builders report first-time buyers are skipping the traditional starter home and jumping straight to that new, move-up home instead.
Waiting longer to buy a first home has increased the median age of a first-time homebuyer, and many are already higher on the income scale than previous generations.
As many as 1.33 million housing starts are predicted next year, according to Freddie Mac’s annual outlook report. Driven by new home sales, total home sales in 2018 are expected to increase by 2 percent.
It remains to be seen if an uptick in housing starts plus the moderate increase in mortgage rates could slow the run-up in prices.
Maybe it’s already starting. After a lackluster August, sales of new U.S. single-family homes unexpectedly rose 18.9 percent in September, defying labor shortages, material costs and expected hurricane slowdowns. In fact, new home sales hit the highest level in nearly 10 years – an annual rate of 667,000 units.
More than two-thirds of the new homes sold were either under construction or yet to be started.
Consumers today are more optimistic about the economy, their jobs and the housing market, and the Federal Reserve is signaling the days of ultra-low mortgage interest rates may soon be over.
New homes cost an average of about $87,000 more than comparable resales, but with no guarantee home prices will ever come down, it appears many home shoppers are still prepared to buy while interest rates are still historically low.