According to the Daily Real Estate News in May of 2017: More homes are predicted to be sold this year than in more than a decade. In 2017, the number of existing-home sales is expected to increase about 3.5 percent to 5.64 million. By 2018, existing-home sales will likely rise another 2.8 percent to 5.8 million, according to forecasts by the National Association of REALTORS®.
The rise in new jobs, pent-up household formation, and increasing consumer confidence are helping to propel the housing market forward, says Lawrence Yun, NAR’s chief economist.
The new-home sector is also expected to see a surge over the next year. New-home sales are expected to rise 10.7 percent this year to 620,000. The sector is also expected to tick up another 8 percent in 2018 to 670,000 sales, NAR predicts.
Buyers are likely to face higher prices on homes. Prices are expected to increase 5 percent in 2017 and another 3.5 percent in 2018, NAR predicts.
“As a result, buyers are compromising on the number of rooms, length of a commute, or other home qualities,” says Joseph Kirchner, senior economist of realtor.com®. “Meanwhile, builders are mostly building for the mid- to upper price range. This mismatch in supply and demand is making affordability more acute for those with modest incomes.”
To still get in, buyers are devoting higher percentage of their incomes toward homeownership or compromising on smaller homes or a home farther from the city center where they work.
“They may need to spend more of their disposable income,” Bajuk says. “Or they may need to lower their expectations on what kind of home they get.”
What buyers need to know:
According to Clare Trapaso of Realtor.com:
By now just about every would-be buyer out there knows there simply aren’t enough homes for sale these days to appease the hordes of competition. But despite the shortages, rising prices, and bidding wars, more homes are expected to be sold this year than in more than a decade.
In 2017, the number of sales of existing homes (which have previously been lived in) is expected to rise about 3.5%, to 5.64 million, according to the midyear forecast from the National Association of Realtors®. The group predicts that existing-home purchases will rise an additional 2.8% in 2018, to 5.8 million.
“The combination of the stock market being at record highs, 16 million new jobs created since 2010, pent-up household formation, and rising consumer confidence are giving more households the assurance and ability to purchase a home,” NAR Chief Economist Lawrence Yun said in a statement. “However, prices are still rising too fast in many areas and are outpacing incomes.”
Think Home Prices Are High Now? Why They’re Likely to Keep Going Up
Buyers might want to sit down for this: Homes flew off the market like the hottest of hotcakes in the first quarter of the year—causing prices to rise even higher than predicted in many parts of the nation.
The median price of existing single-family homes hit $232,100 in the first quarter of the year, according to a recent quarterly report from the National Association of Realtors®. That’s up 6.9% from a year ago—and is nearly double the 3.9% price growth realtor.com® had forecast for 2017.
The NAR report looked at 178 markets across the nation.There were 1.83 million existing homes for sale in the first three months of the year—down 6.6% from the first quarter of 2016.
If the shortage of homes continues, prices could rise 7% to 8% year over year in 2017, he says. Ouch.
That means buyers on a budget “will be able to afford one less bedroom [or need to] accept a house with a longer commute,” Kirchner says.
The first quarter of the year marked the strongest quarterly sales pace in a decade, according to the report.
“Prospective buyers poured into the market,” NAR’s Chief Economist Lawrence Yun said in a statement. “Those able to successfully buy most likely had to outbid others—especially for those in the starter-home market.”
Prices went up in 85% of those metros, which are highly populated areas made up of one or more city cores surrounded by suburban and rural communities. That’s down slightly from 89% in the previous quarter, but 30 metros did see double-digit price hikes in the first three months of 2017.
“Several metro areas with the healthiest job gains in recent years continue to see a large upswing in buyer demand but lack the commensurate ramp up in new home construction,” Yun said. “This is why many of these areas— in particular several parts of the South and West—are seeing unhealthy price appreciation that far exceeds incomes.”
Four of the five most expensive markets were in California. Silicon Valley’s San Jose took the lead, as the median existing single-family home came with a $1,070,000 price tag. The metro was followed by San Francisco, at $815,000; Anaheim, CA, at $750,000; Honolulu, at $746,000; and San Diego, at $564,000.
Overall, the West was also the most expensive housing region. The median price for an existing single-family home was $342,500 in the first quarter of the year. That’s up 8.4% year over year.
Homes weren’t cheap in the Northeast either, at a median $255,000. They were up 2.2% annually.
Prices in the South rose 8.8% year over year, to hit $209,000.
The most affordable region was the Midwest, where buyers could snag a property for a median $176,600. But prices were 5.7% higher annually.
“You can get a much nicer home here than in many places in the country” for quite a bit less, says Lincoln, NE–based Realtor® Ron Herms, of Sellstate Performance Realty. “A lot of other states in the Midwest are going to be similar. … [And] the quality of life in the Midwest is very good.”
The cheapest metros were Youngstown, OH, at $79,200; Cumberland, MD, at $81,800; Decatur, IL, at $86,100; Elmira, NY, at $90,000; and Binghamton, NY, at $91,200.
(Clare Trapasso is the senior news editor of realtor.com and an adjunct journalism professor. She previously wrote for a Financial Times publication and the New York Daily News. Contact her at email@example.com. Follow @claretrap)
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