Surging Housing Market Readies for Price Rises
Sales of new homes picked up in March at 4.5% rate, up 30,000 units from February. It’s suggested sales are recovering from the recent economic lull caused by the trade transition and higher interest rates.
The Q1 economic report will add confidence and price fuel as we head into the buying season.
A surprising stat in the Commerce department March report is that the median sales price of a new home in February fell 9.7% to $302,700. 16% of these homes sold at under $200,000. Buyers are fatigued with high prices and seem to be finding some affordable solutions.
After a strong February, resale home sales plunged 4.8% while prices actually rose again 3.8% to a median of 259,400. Experts had called for a 5.3% increase in sales. The drop in home sales was despite lower mortgage rates, wage gains and slower home price rises. 30 year mortgage rates fell .1% to 4.27%.
NAR reiterated the need for more supply yet the latest news is a drop in new home construction. Lawrence Yun believes the effects of lower rates is still ahead, and that the market is good relative to jobs market strength.
Total housing inventory at March end, rose 50,000 to 1.68 million, up from 1.63 million in February. The added inventory should moderate prices although prices never seem to moderate. Homebuyers will at least have more inventory and perhaps a better bargaining position for their Realtor to negotiate with. Distressed sales increased by 1%. Supply of condos jumped .2% to 4.5 months supply.
With tax breaks ending for high end homes, sales of luxury homes should moderate further. Million dollar home sales fell 10.7% YoY. NAR says the hottest cities were Columbus, Ohio; Boston-Cambridge-Newton, Mass.; Midland, Texas; and Sacramento and Stockton-Lodi, California.
Builder Confidence is Returning
Trading economics and Census.gov new construction numbers show building is down despite completions rising lately. However NAHB says builder confidence rose 1% last month. NAHB’s new construction report isn’t out until May 8th.
With 1.68 million homes available, buyers are waiting for the best time to buy. A NAR survey recently suggested that right now may be the best time to buy.
Why would buying this spring and summer be a wise choice?
- low interest and mortgage rates
- new housing construction dropping
- lots of new construction being released
- recent economic data is positive
- large number of homes now on the market
The chart below from Advisor Perspectives shows how lasting the last recession was, and that confidence and buying intent still is on the mend. With the recent economic setback overcome, consumer confidence should increase.
Screenshot courtesy of AdvisorPerspectives.com
2019 Housing Factors Positive
Job creation is excellent and mortgage rates (4.00% as of April 20 for 30 year fixed rate mortgages) have begin to fall. S&P CoreLogic predicts home prices will rise 5% in the next 9 months. The hottest cities now are Midland, Texas; Chico, California; Colorado Springs, Colorado; Spokane Washington; and San Francisco-Oakland-Hayward, California.
Will the big markets in Florida and California bloom or will the smaller cities continue to draw workers, construction and home purchases? At this point, both look possible. More is better when it comes to housing, so a transition of workers and immigrants to the heartland could have more beneficial effects than many might expect.
This new update and projections for the 2019, 2020 US housing market offers key facts, data, perspective, predictions, price factors, expert opinion and forecasted trends from top sources such as NAR, Trulia, Freddie Mac, Zillow, Case Shiller, Trading Economics, and more.
Although worries of a housing crash persist, a housing hungry Millennial middle class, and powerful economic performance will any outweigh housing crash indicators. As you’ll see in the charts, videos and opinions below this market is an interesting phase.
This United States Housing Report is the most widely read and thorough update/prediction for 2019/2020, and other housing and economic data to 2026. Please bookmark for coming fresh updates!
Looking for specific sales stats and predictions for major cities: Los Angeles, New York, Seattle, Chicago, Philadelphia, San Diego, Miami, Boston, Bay Area, Tampa Sarasota, Denver, and Houston. See forecasts for California housing, and Florida housing markets.
According to the latest Freddie Mac report, the average rate for a 30-year, conventional, fixed-rate mortgage decreased to 4.64% in December from 4.87% in November. That’s up from 3.99% in 2017. You can buy a 15 year fixed rate mortgage at 3.84% and that rate is dropping.
Given the government shutdown, slowing GDP and employment numbers in January, it’s not surprising to see the slide in housing sales. Lawrence Yun suggests interest rates are behind diminished demand. That might be as lower income buyers would be struggling to buy at current prices. If prices slide another 10%, and buyers have more downpayment funds, we’ll begin to see those latent sales.
The democrats are promising to dry up all stimulus money and block President Trump. This conflict is critical to discouraging housing demand and threaten an economic recession.
In January, supply of single detached homes grew fast while condos continued a steep decline. New construction starts fell 11% in December but permits are back up now, signalling builders are feeling good about the housing market and economy again.
Despite poor sales across the nation, particularly in California, Attom Data reports homes are becoming even less affordable (prices outpace wages). Employment and wages are better in California, yet prices are still out of reach for most.
Will Home Prices Rise?
S&P CoreLogic predicts home prices will rise 5% in the next 7 months. And average monthly mortgage payments could rise from $912 last fall to $994 this September 2019.
In fact, Zillow reports the average price of US resale homes in October at $222,000. Zillow forecasts continued upward pressure on sales prices, rising $12,000 (6.4%) more by late 2019. It seems it would take a major economic shock or failure to slow the house price trend and crash the housing markets.
Last month NAHB chief economist Robert Dietz: “While home price growth accommodated increasing construction costs during this period, rising mortgage interest rates in recent months coupled with the cumulative run-up in pricing has caused housing demand to stall.”
NAHB’s housing-market index dropped 8 points to a reading of 60 in November, well below economist’s expectations. Despite a positive economic forecast, and strong rental price growth and stock market outlooks, it is rising mortgage rates and political uncertainty that is casting gloom over the 2019 period for housing.
Which are the most expensive cities to buy a home? San Jose, San Francisco, Los Angeles, and San Diego. Cities with the worst negative equity include Chicago, Las Vegas, Virginia Beach, Baltimore, and Memphis. San Jose and San Francisco lead the way in positive equity. See the California housing market predictions, Florida housing predictions , Illinois housing market and New York housing predictions in more detail.
The high DOM reveal that prices are way out of what most buyers could afford, so they sit longer:
|City||Nielsen Rank||Median Listing Price||Median Listing Price M/M||Median Listing Price Y/Y||Days on Market|
|New York-Newark-Jersey City, NY-NJ-PA||1||$519,050||-0.20%||8.20%||61|
|Los Angeles-Long Beach-Anaheim, CA||2||$834,050||-1.60%||4.40%||40|
|Dallas-Fort Worth-Arlington, TX||4||$349,950||-2.30%||0.00%||38|
|Houston-The Woodlands-Sugar Land, TX||5||$328,025||-1.50%||3.10%||52|
|Miami-Fort Lauderdale-West Palm Beach, FL||8||$506,050||-1.30%||1.20%||76|
|Atlanta-Sandy Springs-Roswell, GA||9||$338,550||-1.50%||12.70%||46|
|San Francisco-Oakland-Hayward, CA||11||$1,000,015||-9.60%||5.50%||30|
|Minneapolis-St. Paul-Bloomington, MN-WI||15||$370,040||-1.30%||5.70%||38|
|Riverside-San Bernardino-Ontario, CA||16||$399,950||-0.30%||5.20%||46|
|Tampa-St. Petersburg-Clearwater, FL||17||$285,050||-1.20%||1.80%||58|
|San Diego-Carlsbad, CA||18||$775,020||-1.20%||1.00%||37|
|St. Louis, MO-IL||19||$214,950||-0.10%||7.50%||51|
|San Antonio-New Braunfels, TX||27||$295,020||-0.30%||2.00%||51|
|Above stats courtesy of NAR|
What’s Ahead for 2020?
The fall elections and 2020 Presidential elections are on people’s minds. Everyone’s eager to buy or sell at the right time and a Trump defeat could send both US stock markets and housing markets crashing. The best guess is that Donald Trump will win narrowly in 2020 and keep protecting fragile US business startups.
However, new housing construction starts fell by 12% in June and multifamily dropped significantly. Post free trade adjustments, higher mortgage rates, and economic uncertainty will reduce new home building. Lumber prices have dropped fast, however home prices are predicted to keeping rising. Good news for sellers.
Housing Market Synopsis: The US real estate market continues to grow with rising prices, new construction, supported by a strengthening domestic economy. President Trump as plenty of options to boost the economic forecast and city housing markets from California to Texas to Florida. It is a sellers market across the country, with persistent, buyer demand, despite gloomy housing crash forecasts for the last 4 years which missed the mark.
Check recent house prices in Los Angeles, San Francisco, San Diego, Sacramento, Denver, Chicago, and Atlanta. Also see how the Seattle, Houston, Miami, New York, Boston, Philadelphia and Orlando/Tampa housing markets are predicted to perform this year.
NAR Predicts Prices Will Rise Another 5% by end of 2019
According to new data released by NAR, home prices are still rising although a lack of listings are suppressing sales. It’s been 35 straight months of declines in homes for sale.
Sellers are demanding record prices while first time buyers can’t afford them or the prices of new housing stock being built. On a more positive note is growing listings and a booming US economy. That’s generated price rise forecasts of over 5% this year, or twice that of inflation and wage growth.
S&P Dow Jones Indices Managing Director David Blitzer says. “Home prices are up 54%, or 40% excluding inflation, since they bottomed in 2012. Reduced affordability is slowing sales of both new and existing single-family homes.”
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Further Information in this updated Report and Housing forecast:
- Market update
- Hottest cities to buy
- NAR/Realtor Outlook on the Housing Market
- Home price update and predictions
- US economic outlook – Tradingeconomics data
- Urban Land Institute panel discussion Video
- Freddie Mac Forecasts
- Jobs report and forecast
- Interest rates and mortgage rates
- Apartment rental prices and forecast
The dwindling numbers of homes for sale are expected to push prices upward in Los Angeles, Philadelphia, San Diego, Boston, Atlanta, Chicago, Houston, Denver, Las Vegas, Dallas, Seattle, New York and and in Florida. It’s all driven by a wildly successful economy and a resistance by local and state governments to support home development in their jurisdictions.
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What’s Driving the California Housing Market?
Strong demand from an eager demographic and economy is clashing with local resident NIMBYism to create a volatile market along with homelessness.
Should I Buy A Home in 2019 or wait to 2020?
The question for many readers is “should I buy a home in 2019?” This current lull might make the next 3 months the best time to buy if you can find a home. The outlook is as positive as could be for buyers. Lock in your mortgage rate.
Overall, predictions and outlook for the US housing market are positive. That’s because the US economy is on its strongest roll ever, bolstered by lower taxes, improved trading agreements, growing American confidence, happiness, comfort, freedom and the American dream has been kindled again.
Take a look at more detailed reports of major US city markets: Sacramento Housing Market | San Francisco Housing Market | Boston Real Estate Market 2019 | Florida Housing Forecast 2019 | Miami Housing Market | Los Angeles Real Estate Forecast | New York Real Estate Predictions | Houston Market Forecast | Philadelphia Real Estate Market | Seattle Housing Report
US Rental Market Update
As Zillow reports apartment rents rose 1.3% over the last year, and yet have levelled off this summer. Rentcafe offers different numbers for each rental type.
|Bedroom Type||Average Rent||Change M-o-M||Change Y-o-Y|
National Rental Housing Data Courtesy of Rentcafe.com
Despite the market correction, experts feel this bull market could continue as long as business keeps coming back to the US. That’s a long process of repatriation. In the meantime, the US economy, low jobless rate, wage growth, investment, strong dollar, and profit growth are giving real estate participants a lot of optimism.
Consumer mood was not so good in July of last year, mostly due to government problems. Yet the market came flying back. These challenges overcome mean more Americans will have more confidence in their personal situation.
The US Economy 2018/2019
These stats from Trading Economics show positive US economic fundamentals that will drive growth in the housing market, and in turn will bolster the economy, since new household consumer spending and housing investment is a key driver of the economy.
As President Trumps Tax cuts wind down, the Fed will still raise interest rates twice in 2019. It’s just one of the issues sparking stock market volatility. Is it enough to scuttle optimistic stock market predictions? No one is quite sure if its a crash or continued booming cycle.
Buyers and sellers will enjoy reading the market trends, stats, threats, and the key factors including housing construction starts described below. Enjoy the big picture!
Housing Demand: More Buyers Joining the Party
Housing market demand predictions: Demand 2018 will see stronger demand as young buyers have more savings to invest in a home and are getting closeer to being able to purchase a home.
Housing demand is also being supplemented by bankruptcy survivors who waited out their 7 year exile joining first time buyer millennials, babyboomers, immigrants, foreign investors (Canadian and Chinese), and even gen Xers, all of whom are looking for houses for sale.
Inflation, Labor Shortages, and Building Supplies
Labor shortages, rising mortgage rates, and higher lumber costs are looming which could mean house prices will rise. With nowhere to go, homeowners are resisting selling. The hope that the resale market will come to the rescue might be unrealistic and and perhaps even fewer resale houses will be for sale.
Housing Expert’s Predictions and a Lot More
Let’s start off with the newly released 2018 Forecast from Freddie Mac. They predict a good year ahead with a solid 5% growth in price. They note that the aging population could keep demand subdued although limited housing for sale should create upward price pressure.
Hottest Cities for Investment Value
This chart from NAR shows where employment growth is strongest and the ratio of recent employment growth to homes being built. That’s a great stat for rental property investors looking for investment income in the best cities.
Compare that to wage growth and actual price appreciation. Again the Bay Area shows the best outlook for employment which has to be your top signal. However, rising oil and gasoline prices and predictions for more, Texas may be your hottest state going through the summer.
Salt Lake City, Denver, Tampa, Dallas, Cape Coral/Naples, Charlotte, Las Vegas, Houston, San Diego, and Grand Rapids have great employment outlooks.
Buying and Selling — Is This the Right Time to buy a Home?
Your asking if this is the right time to buy a home, or to sell your home? Speculation of a housing crash in Miami, State of Florida, Los Angeles, San Francisco Bay Area, Charlotte, San Diego, San Jose, Denver, Seattle, and many other overheated markets has more people listing their house or condo. Yet, the market is healthy, so there’s no emergency. Prices are stable so you won’t get much more by waiting.
Check out these other posts for homebuyers, investors, and realtors:
What’s also a good omen is what you’re going to read in this post. It may help you do many things in 2019, from finding employment (see the US Jobs forecast), to understanding politics, discovering high performing best investments 2017 to researching the best cities to live or buy houses or property in.
Interest in rental income investment and apartments is particularly strong now in places like Miami, Dallas, Seattle and San Francisco. The Los Angeles housing, San Diego housing, San Francisco Bay Area housing markets are just a few to look at. Seattle, Denver, Boston, South Florida, Palm Beach, Philadelphia and New York have a promising outlook too.
Housing Stats from NAR, Forisk, Trading Economics
These stats below are collected from top research and reporting companies including NAR, Forisk, Trading Economics, and other real estate market researchers.
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Expert Predictions – US Housing
1. Expert Prediction from Eric Fox, vice president of statistical and economic modeling (VeroForecast) — The top forecast markets shows price appreciation in the 10% to 11% range. The top forecast market is Seattle, Washington at 11.2%, followed by Portland, Oregon at 11.1% and Denver, Colorado at 9.9%.
These economies have robust economies, growing populations and no more than two month’s supply of homes. In fact, the forecast of the Boston market increase sharply to 7.4% is due to reductions in inventory and unemployment. On the other hand, the worst performing market is Kington, New York with 2.5% depreciation, followed by Ocean City, New Jersey at -2.1%, Kingsport, Tennessee at -1.9% and Atlantic City, New Jersey and San Angelo, Texas tied at -1.4%. — BusinessWire
2. Pantheon Macro Chief Economist Ian Shepherdson explains that “Homebuilders behavior likely is a continuing echo of their experience during the crash. No one wants to be caught with excess inventory during a sudden downshift in demand. In this cycle, the pursuit of market share and volumes is less important than profitability and balance sheet resilience.” — Marketwatch.
If construction rates do moderate, prices in the hot markets of Miami, San Francisco, Los Angeles, San Diego, New York, Boston, and Phoenix should rocket to all time highs but what is the risk of a housing market crash? House Renovation too is at an all time high in expenditure and this might have an impact on new housing starts.
US Housing Starts to 2024
This enlightening stat in the graphic below shows the US economy hasn’t recovered from the great recession and housing crash of 2007. Single family spending is rising rapidly, yet no one believes conditions for high inflation exist. It points to years of solid, healthy growth ahead with an unfulfilled demand for single detached homes.
|Housing Starts and Interest Rate Forecast to 2019|
|Housing Activity (000)|
|Total Housing Starts||928||1,001||1,107||1,177||1,204||1,246||1,299|
|New Single Family Sales||430||440||503||561||610||647||693|
|Existing Single-Family Home Sales||4,475||4,338||4,627||4,828||4,978||5,029||5,119|
|Federal Funds Rate||0.13%||0.13%||0.38%||0.63%||1.13%||1.88%||2.38%|
|90 day T Bill Rate||0.06%||0.03%||0.05%||0.32%||0.96%||1.71%||2.22%|
|One Year Maturity||0.13%||0.12%||0.32%||0.61%||1.20%||2.41%||2.70%|
|Ten Year Maturity||2.35%||2.54%||2.14%||1.84%||2.38%||2.82%||3.22%|
Freddie Mac Commitment Rates:
|Fixed Rate Mortgages||3.98%||4.17%||3.85%||3.65%||4.10%||4.54%||4.96%|
|Data are averages of seasonally adjusted quarterly data and may not match annual|
Chart stats courtesy of Nahb.com
Employment Outlook: Let’s not forget jobs. Total employed persons in the US will grow 800,000 over the next 2 years.
Apartment Rental Forecast
Demand for apartment rentals is on the rise and construction starts of multi-unit dwellings is rising to match demand. That creates more opportunity for rental property investors to grow their portfolios in 2018. Yardi says YOY rent growth was 3.0% and they expect rent growth to remain in the 2.5% range.
Cities with the most apartment construction include Dallas, Houston and Austin, reflecting Texas strong recovery. For more information, see this post on the best cities to buy real estate and best cities to live in and with the best job outlook.
There you have a quick graphical synopsis of factors that will support a strong US real estate market for 4 more years.
What’s Your Personal Real Estate Sales Forecast?
What’s the forecast and trends for the real estate sales in your region? If you’re in Vancouver, Toronto, Miami Fort Lauderdale, San Diego, San Francisco, Atlanta, Tampa, and many other US centers, you’re probably grinning from ear to ear.
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Housing Market Predictions