2017 - What's Going to Happen?

Most of this year has been a struggle for keeping a sufficient amount of home inventory. This factor alone has been the biggest hurdle to achieve a fully healthy housing market. According to the newly released forecast from the National Association of Realtors, 2017 will be better.

Chief economist from NAR, Lawrence Yun, and Dennis Lockhart, the CEO of the Federal Reserve Bank of Atlanta discussed the 2017 economic forecast at the residential housing and economic forecast session at the 2016 Conference and Expo.

Yun in short said, the demand and sales were weakened over the summer when the low supply hindered buyer’s choices. This in turn made the price grow pushing some consumers out of the market.

Yun predicts that 2017 will see the skimpy supply grow and the affordability issues dissolve; but warns it will take time and won’t happen in a short period of time. He said he believes housing starts can jump 5.3% to 1.22 million next year.

The growing demand and the shortfall to make up for recent years is still needing another 1.5 million homes. It’s estimated that new single-family home sales are likely to reach 570,000 homes by the end of 2016, and rise to 620,000 for 2017.

Who will buy these new homes? Millennials! Both Yun and Lockhart are hopeful that the housing demand will include leading-edge millennial households who will jump into the market at a growing rate.

The NAR surveyed current renters and recent buyers, and found there’s a strong will to own homes of their own by younger generations. The market should see a big lift in demand from these new buyers over the next several years. The only thing that could slow this down is not enough inventory. So it is crucial home builders build, build, build, at entry level prices.

Yun also predicted that 2017 existing-home sales should grow around 2% to around 5.46 million, and even 4% by 2018 to $5.68 million.

Median existing-home prices will likely rise by 4% this year and the next (2017). For the rest of 2016, home prices are expected to finish their current pace at 5.36 million, which happens to be the best year since 2006.

The factors leading to people wanting homes this year were the incredibly low interest rates, the growing economy, and steady job growth. 

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