| October home sale prices were up nationwide both year-over-year and month-over-month, according to a new report released yesterday by CoreLogic, a global property information and analytics firm. Single-family home prices increased 7 percent between October 2016 and October 2017. Prices rose 0.9 percent between September and October 2017.
Looking ahead, the CoreLogic HPI Forecast indicates that home prices will increase by 4.2 percent nationwide on a year-over-year basis from October 2017 to October 2018, and on a month-over-month basis home prices are expected to decrease by 0.2 percent from October 2017 to November 2017. The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.
“Single-family residential sales and prices continued to heat up in October,” Dr. Frank Nothaft, chief economist for CoreLogic, said in a statement. “On a year-over-year basis, home prices grew in excess of 6 percent for four consecutive months ending in October, the longest such streak since June 2014. This escalation in home prices reflects both the acute lack of supply and the strengthening economy.”
In Massachusetts, the number of single-family home sales surged to 5,192 in October 2017, up 5.5 percent from October 2016, according to data provided by The Warren Group, publisher of Banker & Tradesman. The median price of a single-family home was $360,000 in October 2017, up 5.9 percent from October 2016.
“Despite a shrinking inventory, the Massachusetts real estate market continues to keep on truckin’,” Timothy Warren, CEO of The Warren Group, said in a statement. “The 5.5 percent gain in sales volume last month is the biggest monthly increase since March and the prior two months showed a slight decline. Demand is strong and we would see higher sales if there were more homes on the market to choose among.”
Housing experts at Zillow this week increased their expectations for home price appreciation as rising prices show no signs of slowing, bringing growth appreciation in line with CoreLogic’s predictions.
Zillow expects home prices to climb 4.1 percent in 2018, according to the 2017 Q4 Zillow Home Price Expectations Survey, an increase in expectations for 2018 from one year ago, when experts predicted home prices would grow 3 percent in 2018.
The quarterly survey, sponsored by Zillow and conducted by Pulsenomics LLC, asked more than 100 housing experts, market strategists, and economists about their expectations for the U.S. housing market in 2018 and beyond.
The United States is in the middle of a supply crisis – the number of homes for sale has fallen on an annual basis for the past 33 straight months. Although building activity picked up slightly toward the end of this year, the biggest surprise of the 2017 housing market was the slow pace of single-family home building, according to the panelists. Only 16.7 percent expect it to change in 2018, a sign that limited inventory will still be a driving force in the housing market next year.
Experts believe 2017’s low mortgage rates are likely to rise next year to around 4.5 percent from the current rate of about 3.9 percent. The average 30-year fixed mortgage rate has hovered around historical lows for years, and is well below the 6 percent rates seen during the run up to the housing bubble.
“The American labor market is stronger than it’s been in decades and Americans, particularly young Americans, are increasingly feeling confident enough to buy homes,” Zillow senior economist Aaron Terrazas said in a statement accompanying the release of the survey. “Homebuilding has not kept pace with this surge in demand and remains well below historical norms. We don’t expect that these demand-supply imbalances will fundamentally shift in 2018: Demand will continue to grow and, though supply should increase somewhat, we still won’t build enough new homes to meet this demand, contributing to higher prices. Higher mortgage rates will eat into buyers’ budgets, putting even more price pressure on the most affordable homes for sale. Unless there is a fundamental shift in the number and type of homes for sale, this is the new normal of the American housing market.”
