Mortgage Insights

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Higher Mortgage Rates and Improved Housing Inventory Predicted for 2018

Dec 1, 2017

Housing economics specialists are expecting big changes in the market next year, including some sort of relief in the ongoing housing stock shortages.

In its latest report, Realtor.com said the market will start to experience home price increases that are more manageable, along with a slight increase in home sales. Experts from the property listings site also expect Millennials to start pushing up their share of the housing market next year.

However, experts remain uncertain about the net effect the proposed tax law changes will have on the market.

Realtor.com’s Director of Economic Research, Javier Vivas, said: “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 site’s projections indicate that although there will be a slight increase in existing home sales, the biggest increases will come from new home sales. Specialists in the field agree that this should help to alleviate the current low inventory levels in the affordable housing market.

The experts also made a few other predictions:

  • Mortgage rates will average 4.6% throughout 2018 and reach 5.0% for 30-year fixed-rate mortgages before the end of the year.
  • Home price growth should settle at around 3.2% in 2018. This reduced rate of increase is likely to boost home sales.
  • Existing home sales are expected to increase by around 2.5% as the current low inventory levels start to improve.
  • New home sales will rise at roughly the same speed as housing starts, with an overall increase of 7% predicted for the year.
  • Housing starts will increase in line with the increase in new home sales. A total increase of 3% is expected for 2018, and single-family starts should increase by around 7%.
  • Homeownership rates will settle at around 63.9% after reaching a 50-year low during the second quarter of last year.

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