2018 Predictions for the Housing Market
Mortgage Bankers Association (MBA) Chief Economist Mike Fratantoni said 2018 home purchase originations could increase at nearly double the clip from 2017.
"The housing market has been hamstrung by insufficient supply, with inventories of homes remarkably low, given the home price growth we've experienced," Fratantoni said. "The job market remains strong; demographic trends are quite favorable; mortgage credit is becoming more available to qualified borrowers; and home prices should continue to rise. All the pieces are in place for stronger growth in 2018 and beyond."
Other key housing projections:
--MBA forecasts projects housing starts to rise steadily over the next few years, rising to 1.289 million in 2018 from 1.195 million in 2017, rising further to 1.376 million in 2019 and 1.438 million in 2020.
--Home sales are expected to show steady increases in the MBA forecast, with existing home sales rising slightly to 5.486 million units, seasonally adjusted, from 5.440 million in 2017. Existing home sales are expected to rise further to 5.810 million in 2019 and 5.991 million in 2020.
--New home sales are also expected to improve, rising to 623,000, seasonally adjusted, in 2018 from 584,000 in 2017 and to 662,000 in 2019 and 696,000 in 2020.
--Interest rates for 30-year fixed rate loans should rise slowly, finishing 2017 at 4.0 percent, rising to 4.6 percent in 2018, 5.0 percent in 2019 and 5.3 percent in 2020.
MBA projects monthly job growth will average 125,000 per month in 2018, down from 150,000 per month in 2017, and that the unemployment rate will decrease to 4.0 percent by the end of 2018.
The new tax rules should spur people to buy cheaper homes next year, a trend that has already become popular in recent years among thrifty millennials who are shunning expensive living. Indeed, big homebuilders including Lennar Corp and PulteGroup Inc have suggested they will invest more in entry-level homes. D.R. Horton Inc , the largest U.S. homebuilder by number of homes sold, expects its cheaper brand called “Express Homes” to grow at least 10 to 15 percent over the next three years. The business, aimed at first-time buyers, made up 37 percent of the number of homes sold by D.R. Horton in the latest quarter.
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