Inventory constraints that have fueled a sharp rise in home prices and made it difficult for buyers to gain a foothold in the market will begin to ease in the new year as part of broad and continued market improvements.

The easing of the inventory shortage, which is expected to result in more manageable increases in home prices and a modest acceleration of home sales, is being predicted based on developments first detected by realtor.com® late this summer. The annual forecast, which is among the industry’s bellwethers in tracking and analyzing major trends in the housing market, also foresees an increase in millennial mortgages and strong sales growth in Southern markets. The wildcard in 2018 will be the impact of tax reform legislation currently being debated in Congress.

The new year will set the stage for a significant inflection point in the housing shortage. Inventory increases will be felt in higher priced segments after spring home buying season, which we expect to take hold and begin to provide relief for buyers and drive sales growth in 2019 and beyond.

Realtor.com® Forecast for Key Housing Indicators

Housing Indicator
Home price appreciation
Mortgage rate
Existing home sales
Housing starts
New home sales
Home ownership rate

Realtor.com® 2018 Forecast
3.2% increase, enabling a sales pickup
Average 4.6% throughout the year and reach 5.0% (30 year fixed) by the end
2.5% growth, low inventory trend starts to reverse
3% growth in home starts; 7% growth in single family home starts
Increase 7%
Stabilize at 63.9% after bottom in Q2-2016

For the full story — which includes Five Housing Trends for 2018 and the Top 100 Largest U.S. Metros Ranked by Forecasted 2018 Sales and Price Growth — head to Realtor.com

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