The Home Buying Institute’s latest analysis of the housing market moving forward predicts that home prices will continue their ascent for the rest of the year and into 2020.
Information from Zillow shows that, although slowing, average home prices are expected to reach nearly $242,000 next year.
“From an economic standpoint, we could actually benefit from a slowdown in home-price appreciation,” the report states. “House values have been rising abnormally fast over the past few years, outpacing wage growth along the way. This had created affordability problems for a lot of would-be buyers, often pricing them out of the market entirely.”
The report states that home prices at the Metro level are more unpredictable and vary, but does forecast continued growth in those markets.
The National Association of Realtors reported in August that prices for single-family homes in metros increased annually in 91% of the markets in Q2 2019.
Metros that saw a decline in single-family pricing included San Jose-Sunnyvale-Santa Clara, California (-5.3%), San Francisco-Oakland-Hayward, California (-1.9%), and Honolulu, Hawaii (-1.2%). Boise City-Nampa, Idaho; Abilene, Texas; Columbia, Missouri; Burlington-South Burlington, Vermont; and Atlantic City-Hammonton, New Jersey, all saw double-digit decreases.
“New home construction is greatly needed, however home construction fell in the first half of the year,” Lawrence Yun, NAR Chief Economist, said. “This leads to continuing tight inventory conditions, especially at more affordable price points. Home prices are mildly re-accelerating as a result.”
For context, the Home Buying Institute looked back on the past several years of the housing market beginning in the early 2000s.
The early 2000s saw the housing market booming and demand for homes was high. However, poor mortgage practices chronicled a few years later led to 2008 and the housing market collapse, largely caused by high-risk loans. The U.S. economy crashed and led the nation into the Great Recession.
After several years of declining home prices and sales, the market began to recover in 2012, as the average home price has increased steadily since.