Property prices and sales expected to slow in the United States in 2018
Pending home sales in the United States were mostly flat in November while existing homes sales and prices are forecast to slow in 2018, the latest index report suggests.
Sales increased by just 0.2% nationally in November month on month and the pending home sales index from the National Association of Realtors (NAR), while at its highest reading since June is now just 0.8% above a year ago.
Lawrence Yun, NAR chief economist, pointed out that it was the first annual rise since June and in effect the housing market is closing the year on a stronger note than earlier in the summer, backed by solid job creation and an economy that has kicked into a higher gear.
‘However, new buyers coming into the market are finding out quickly that their options are limited and competition is robust. Realtors say many would-be buyers from earlier this year, stifled by tight supply and higher prices, are still trying to buy a home,’ he pointed out.
One of the biggest questions heading into 2018, according to Yun, is if the depressed levels of available supply can improve enough to slow price growth and make buying a home more affordable.
He explained that while last month’s significant boost in existing sales was noteworthy, it did come with some concerns. Sales prices were up 5.8%, more than double wage growth, and the 3.4 month supply of homes on the market was the lowest since NAR began tracking in 1999.
‘The strengthening economy, and expectation that more millennials will want to buy, serve as promising signs for solid home buying demand next year, while also putting additional pressure on inventory levels and affordability,’ said Yun.
‘Sales do have room for growth in most areas, but nationally, overall activity could be slightly negative. Markets with high home prices and property taxes will likely feel some impact from the reduced tax benefits of owning a home,’ he added.
Yun forecasts for existing home sales to finish 2017 at around 5.54 million, which is an increase of 1.7% from 2016. The national median existing home price this year is expected to increase around 6%. In 2018, Yun anticipates essentially no change with a decline of 0.4% in existing sales and price growth to moderate to around 2%.
A breakdown of the index figures show that sales in the Northeast rose by 4.1% in November and are now 1.1% percent above a year ago while in the Midwest they increased by 0.4% and are 0.8% up year on year.
Pending home sales in the South fell by 0.4% in November but are still 2.5% higher than last November and they also fell in the West, down by 1.8% and are also down 2.3% compared to a year ago.