Dive Brief:
- The National Association of Realtors’ mid-year forecast projects that housing starts will reach 1.27 million this year, an 8.4% bump, and new single-family sales also will climb 8.4% to 620,000. Ongoing challenges continue to suppress single-family starts — which are still below the 50-year average — including shortages of labor and lots, as well as tight lending conditions.
- Existing-home sales are on pace to reach 5.64 million for 2017, a 3.5% increase over 2016 and the highest level since 2006, according to the . Median prices for existing homes also are anticipated to climb by about 5%.
- Inventory shortages, particularly in the low- and mid-market range, are one of the factors suppressing homeownership rates. NAR Chief Economist Lawrence Yun noted that tight supplies are causing home prices to grow faster than incomes in some markets.
Dive Insight:
The trend from the past few years of the housing recovery is continuing in 2017: a slow, but steady, climb restrained by lingering challenges, such as labor shortages, tight lending and student loan debt.
This gradual upward movement is reflected in a number of housing indicators, including the Housing Market Index, which this month saw builder confidence reach its second-highest point since the recession.
Housing starts dipped to a seasonally adjusted rate of 1.172 million in April, 2.6% below March but 0.7% higher than April 2016. On the labor front, residential construction added just 900 net jobs in April.
Low inventory continues to be a challenge, particularly for first-time buyers as starter-home inventory fell 8.7% in the first quarter or 2017. Trulia reported that the percentage of monthly income required to buy a starter home rose 2.9 points from 2016, to 38.3%.
This recent NAR report offers a more optimistic view of the existing-home sale market this year, as compared with its forecast released in November 2016. At that time, the association predicted that existing-home sales would climb only 2% this year and see a 4% bump in median price.
