Home prices across the country continue to rise, though they’re showing signs of slowing a bit. Mortgage rates, meanwhile, continue to hover around 4% on average. And inventory is still constrained. Here’s a look at these and other housing market trends, at the start of 2018.
Home Prices Still Climbing
Home prices in most cities across the U.S. continue to rise, posting above-average annual gains. According to the latest data reported by Zillow, the median home value for the nation as a whole rose by 6.5% over the last year or so. That’s more than the historical average for annual price growth, going back several decades.
Economists predict that home prices will slow a bit during 2018, perhaps returning to a more “normal” rate of appreciation over the coming months. Of course, these kinds of trends can vary by location. Some markets are more competitive than others, with less inventory and more demand. And those markets will likely outpace the national average in 2018.
Mortgage Rates Break the 4% “Glass Ceiling”
On January 18, Freddie Mac announced the results of its latest Primary Mortgage Market Survey® (PMMS). This long-running survey gathers interest rate data from more than 100 lenders nationwide, to compile an average.
The average rate for a 30-year fixed home loan rose to 4.04% for the week ending January 18, 2018. That’s the first time this average has risen above 4% since July of 2017. (For the last few months, it has been hovering below 4.0%.) So we’ve crossed a threshold in that department.
Analysts with Freddie Mac and the Mortgage Bankers Association expect rates to rise gradually over the coming months. But, as usual, there will probably be some ups and downs along the way.
Limited Inventory in Most Housing Markets
Here’s a trend that’s very relevant to home buyers. Inventory in most real estate markets across the country is tight right now, in relation to demand. This is partly why home prices have been rising steadily for the last few years. There just aren’t enough homes listed for sale in most areas to meet the demand from buyers.
According to a recent news release from Zillow, there are 10% fewer homes on the market today (nationally) than there were a year ago. In some of the markets where prices are rising fastest, there are 40% fewer homes compared to a year go.
To quote their report:
“The number of homes for sale nationwide has declined on an annual basis for the past 35 straight months, and just 16.7 percent of a panel of housing experts surveyed in December 2017 expect a meaningful increase of home building in 2018, a sign that limited inventory could continue to drive the housing market this year.”
This underscores the importance of having help from an experienced real estate agent. Now, more than ever, it’s important for home buyers to make strong offers in a timely action — and to support those offers with actual market data. This is the key to success in a competitive market with limited inventory.
So those are some of the most important trends in the current housing market, as we head into 2018.