Almost half way into 2018 and strong economic tailwinds are expected to continue to push prices up in the US property market. Sales look set to rise moderately, although those for new single-family homes should increase dramatically. At the same time, inventory levels will remain historically low.
A recent real estate forum tackled the question of where the US property market is going this year. Attended by the country’s main experts in the real estate sector, the forum focused on the economic background and how it will affect the market.
Strong economic tailwinds
According to Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), the US economy currently ticks all the boxes. The economy is stronger, the job market has strengthened and wages have risen.
Almost at mid-term in the year, the NAR predicts GDP growth of 2.7% for 2018, slightly ahead of the 2.3% registered last year. Unemployment should fall to 4%, from 4.4% in 2017. Consumer confidence will edge up marginally this year to 125 points.
On the cards for the US property market
In terms of predictions for the housing market, NAR forecasts a slight rise in sales (1.8%) across the board. This figure soars, however, when it comes to sales of new single-family homes. NAR predicts a rise of 14.9% in this sector.
Prices too are set to continue their upward trend. The median price should reach US$258,300 this year, a 4.4% increase on last year. The price for new-build properties will average at US$331,400, up 2.5% on 2017. The forum reported that house prices in the US rose by 48% between 2011 and 2017.
Still a housing shortage
One characteristic of the US property market that shows no sign of abating is the lack of inventory. NAR reports that at the end of March there were 1.67 million homes on the market, 7.2% fewer than a year earlier. This translates to just 3.6 months’ supply.
“Inventory has trended down steadily for the past five years,” said Yun, “and the country is now experiencing the lowest levels in a generation.”
He believes that the continued drop in supply means that property prices will continue to rise throughout 2018. Inventory levels may be helped slightly by the increase in housing starts – NAR forecasts a 12% increase in new construction this year, well ahead of the 2.2% registered in 2017. But Yun highlights the fall in homeownership where there has been “no meaningful rise” and he says that “more home construction is needed”.
(Source: National Association of Realtors)