Consumers should expect home sales to flatten and home prices to continue to increase, though at a slower pace, according to a 2019 housing and economic forecast presented at the 2018 National Association of Realtors Conference & Expo held in Boston early this month.
Lawrence Yun, chief economist with the National Association of Realtors, said 2017 was the best year for home sales in 10 years, and sales are only down 1.5 percent year to date. This year, 90 percent of markets nationwide are experiencing price gains, and very few are experiencing consistent price declines.
“Statistically, it is a mild twinge in the data and a very mild adjustment compared to the long-term growth we’ve been experiencing over the past few years,” said Yun.
Yun was quick to shut down any speculation of the possibility that the market is experiencing a small bubble. He explained current market conditions are fundamentally different than before the recession 10 years ago.
“Most states are reporting stable or strong market conditions, housing starts are under-producing instead of over-producing, and we are seeing historically low foreclosure levels, indicating that people are living within their means and not purchasing homes they cannot afford,” said Yun. “This is a stronger, more stable market compared to the loosely regulated market leading up to the bust.”
Looking to next year, Yun stated, “The forecast for home sales will be very boring, meaning stable.”
With a few months of data remaining in 2018, Yun estimates existing-home sales will finish at a pace of 5.345 million, a decrease from 5.51 million in 2017. In 2019, sales are forecasted to increase 1 percent to 5.4 million.
The national median existing-home price is expected to rise to around $266,800 in 2019, up 3.1 percent from this year and $274,000 in 2020. “Home price appreciation will slow down, the days of easy price gains are coming to an end, but prices will continue to rise,” said Yun.
These forecasts, however, are dependent on higher levels of home production. Currently, the supply of inventory is at below five months.
“All indications are that we have a housing shortage. If you look at population growth and job growth, it is clear that we are not producing enough houses,” said Yun.
Commenting on the overall health of the U.S. economy, Yun said the economy is good, with low unemployment, record high job openings, historically low jobless claims, job additions for eight straight years and wages beginning to increase.
“This type of activity in the economy should support the housing market, even as interest rates rise,” said Yun.
At the same session Lisa Sturtevant, president of Lisa Sturtevant & Associates, discussed the importance of homeownership on a social level. Sturtevant indicated homeowners tend to be in better physical and mental health and have greater opportunity for economic self-sufficiency. Additionally, communities with more homeowners tend to be more economically prosperous and better able to attract and retain workers.
The Realtors Conference & Expo is attended by thousands of the nation’s Realtors each year, including members of the Silicon Valley Association of Realtors. “The annual conference is great opportunity for Realtors to network and learn about the latest in trends and technology in real estate. The business of real estate is changing and evolving and the education sessions and meetings help Realtors to stay educated so we can better serve our clients,” said Bill Moody, president of the local trade association.
