Recent housing market forecasts for 2017 through 2018 suggest that home prices in the U.S. could rise somewhere between 3% and 5% over the next 12 months.
From a historical standpoint, this could be considered “normal” growth. When looking back 30 years or so, home prices in the United States tend to rise by about 3% to 4% annually — despite the occasional bubble or bust.
Housing Market Forecast Suggests Steady Growth Into 2018
Earlier in June, CoreLogic reported the results of its home price index for April, along with a housing market forecast that extends into 2018. By their estimation, house values in the United States rose by 6.9% in April 2017, compared to a year earlier.
The largest gains occurred in Washington State, Utah and Oregon. For months now, Washington has had the fastest rising house prices in the United States.
Also noteworthy: home values in 28 states have now risen above their pre-crisis peaks. This means prices in those states have never been higher than they are right now. And as home values across the country continue to appreciate, even more states are approaching their pre-crisis peak levels.
CoreLogic also offered a housing market forecasts for 2018. Based on current trends, their analysts expect U.S. home prices to rise by 5.1% over the next year. This forecast was issued on June 6, 2017.
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A Summary of Predictions from 100+ Real Estate Economists
Last month, the real estate information company Zillow surveyed a panel of more than 100 real estate economists and analysts. Among other things, the group offered a housing market forecast for both 2017 and 2018.
On average, the economists predicted that home prices in the U.S. would increase by 4.8% in 2017, followed by a gain of 3.65% in 2018.
Looking out even further, the group predicted that values would rise by 17.9% between 2017 and 2021.
So between these two predictions, it seems we can expect a year of normal growth. I use the word “normal” in this context to distinguish these forecasts from the above-average price gains we’ve seen over the last couple of years.
In recent years, home values in many cities have been rising rapidly, to the point that they outpaced wage and income growth. This was mostly the result of an imbalance between supply and demand. In many cities across the country, housing inventories are falling short of demand. As buyers compete fiercely for limited inventory, it puts upward pressure on home prices.
While they could ease over the coming months, inventory shortages will likely remain a factor in the housing market of 2018.
Industry Group Projects Gradual Rise in Mortgage Rates
If the prospect of rising home prices isn’t enough to create a sense of urgency among buyers, we also have a recent forecast suggesting a continual rise in mortgage rates.
Earlier this month, the Mortgage Bankers Association updated its monthly finance forecast. The industry group’s outlook covers a broad range of economic indicators, including mortgage rates.
According to their housing market forecast, the average rate for a 30-year fixed home loan could rise to 4.4% by the fourth quarter of 2017. They expect rates to continue inching upward through 2018 as well.
Collectively, these forecasts and predictions make a good case for buying a home sooner rather than later. If these projections prove accurate — or even within the ballpark — home buyers who postpone their purchases until 2018 will encounter higher housing costs.
Disclaimer: This article contains predictions and forecasts for the U.S. housing market in 2017 and 2018. These projections were made by third parties not associated with our company. The Home Buying Institute makes no claims or assertions about future housing and economic conditions.