As the National Association of Realtors (NAR) opened its annual conference in Boston, Chief Economist Lawrence Yun told attendees that the association expected flat overall home sales and a slowing increase in home prices in 2019.
With a few months of data remaining in 2018, Yun estimates that existing-home sales will finish at a pace of 5.345 million – a decrease of 3 percent from 2017 (5.51 million).
Next year, sales are forecast to increase 1 percent to 5.4 million.
The national median existing-home price is expected to rise 3.1 percent to $266,800 in 2019 and again in 2020 to $274,000.
“Ninety percent of markets are experiencing price gains, while very few are experiencing consistent price declines,” Yun said, according to a NAR release from the session. “2017 was best year for home sales in 10 years, and 2018 is only down 1.5 percent year to date. Statistically, it is a mild twinge in the data and a very mild adjustment compared to the long-term growth we've been experiencing over the past few years.”
Yun also dispelled the notion that the housing market was reaching a bubble.
“The current market conditions are fundamentally different then what we were experiencing before the recession 10 years ago,” he said. “This is a stronger, more stable market compared to the loosely regulated market leading up to the bust."
There was one word of caution, however, that the forecasts were depending on home production increasing. Tight supply of housing has been cited as a headwind to a stronger market as demand for housing rose while fewer homes were built to meet increased demand.
“All indications are that we have a housing shortage. If you look at population growth and job growth, it is clear that we are not producing enough houses,” Yun said. “This is often a local issue, not a national one.”
Yun said the days of “easy price gains” also were near an end.
“Home price appreciation will slow down – the days of easy price gains are coming to an end – but prices will continue to rise,” he said.
Yun was joined by Lisa Sturtevant, president of Lisa Sturtevant & Associates, LLC, who discussed affordable housing. Although the country is experiencing historically normal levels of affordability, potential buyers may be staying out of the market because of perceived problems with affordability, the pair said.
“NAR research shows that a lower percentage of consumers think that now is a good time to buy while more are indicating that it is a good time to sell,” Yun said. “Problems could arise if the market is flooded with too many sellers and not enough buyers. Fortunately, that does not appear to be the case, as indicated by months’ supply of inventory at below five months.”
Sturtevant said communities with more homeowners tended to be more economically prosperous and better able to attract and retain workers.
“The results of my research have compelled me to see the importance of affordable, stable housing, and the positive economic impact to local communities,” she said.
The annual conference runs through Monday Nov. 5.