Despite rising prices and shortages, more single-family homes are predicted to be sold this year than in more than a decade. According to the forecast from the National Association of Realtors, home sales are set to see their best year since 2006, likely due to the rise in new jobs and improving household confidence. Let’s break it down, shall we?
Home Sale Trends
The first quarter of 2017 had the best sales pace for existing homes in a decade. This pace is expected to continue for the rest of 2017—with about 5.64 million sales, an increase of 3.5% from 2016. The NAR predicts that existing home sales will rise another 2.8% in 2018, to about 5.8 million.
As for brand-new homes, builders can’t even keep up with how quickly they’re selling. New home sales are expected to jump 10.7%—from 560,000 in 2016 to 620,000 in 2017. In 2018, we can expect another 8% rise to about 670,000 sales.
As you may have guessed, the price tags of all homes are continuing to rise and are expected to rise even higher. In 2017, NAR predicts a 5% price jump, and in 2018, another 3.5%. Consequently, you’ll find that many homebuyers are choosing smaller homes, further away commutes, or are compromising other qualities to be able to afford these homes.
Due to the scarcity of homes, prices are rising by double digits in some markets along the coasts. This is leading many current homeowners to stay put, rather than trading up for a larger home. Therefore, the smaller, affordable starter homes, are few and far between.
What All This Means
Demand is far surpassing supply, which is causing many buyers to settle for homes out of their price range. They’re putting higher and higher percentages of their incomes toward owning a home—sometimes even spending half of their take-home pay just on their housing. Although sales rates are higher than they’ve been in a decade, there could be even more activity if the supply of new and existing inventory met the demands of the market.