Change is inevitable and constantly occurring. While the speed of change varies, change goes on – another Axiom (truth) regarding the U.S. economy and demand for real estate.
Each month, Fannie Mae, Freddie Mac and the Mortgage Bankers Association update and revise their forecasts for new and existing housing sales and median prices, with Fannie and Freddie forecasting annually through 2020 and the Mortgage Bankers going out to 2021. These are the best estimates of expectations available.
Existing & New Home Sales
The following table shows the forecast based on their March 2019 forecasts for existing home sales. While existing home sales are anticipated to rise just 0.8 percent in 2019 (based on an average of the three forecasts), the range of change goes from a decline of -0.2 percent to an increase of 2.7 percent. In 2020 the current outlook is for a 2.3 percent gain in total existing home sales. New home sales are anticipated to rise by 1 percent in 2019 and an added 4.5 percent in 2020.
Median Home Prices
While home prices are forecast to continue to rise, the expectation is at a muted rate from recent years. Median prices for existing homes rose from $245,950 in 2017 (based on the 12-month average of the monthly median prices) to $257,280 in 2018 — a gain of 4.6 percent. The current outlook is for median prices of $267,800 and $273,990 in 2019 and 2020 respectively, equating to gains of 3.0 percent and 2.5 percent. New home prices are expected to increase at a slightly greater rate of 3.4 percent in 2019 and 2.4 percent in 2020.
My personal expectation is for existing home sales to be down 2 percent in 2019 versus 2018, with the median price rising from 2.5 to 3.1 percent. Sales for the first two months of 2019 are already down 5.5 percent from the period a year ago, and the average median price is up 3.7 percent.
Recognize that due to seasonality, home sales in January and February make up just 5.6 percent and 5.8 percent of total sales annually, while June alone almost matches that at 10.5 percent. See the Stewart Blog at http://blog.stewart.com/stewart/2018/12/11/tis-the-season-when-the-most-and-fewest-homes-sell-and-also-the-greatest-and-least-prices/ for a discussion on seasonality.
Good news coming up, however, is the greater selection of housing for prospective buyers this spring given an increase in listing inventory and falling interest rates. Buyers this spring should see the more homes available for sale than in the past four years. That also bodes well in their pricing strategies. In the first three weeks of March this year, just 16 percent of the written offers for homes resulted in a bidding war, down from 61 percent a year ago according to Refin. Indeed, many markets around the country have evolved from a seller’s market to buyer’s.