CAR’s forecast reflects expectations of solid job growth and favorable interest rates
The California housing market should perform strongly in 2018 as housing demand continues to be strong, according to a forecast released by the California Association of Realtors (CAR).
CAR expects sales of existing single-family homes to see a modest 1% increase in 2018 to 426,200 units from the projected sales figure of 421,900 for 2017. The 2017 projection is a 1.3% increase from the pace of 416,700 sales in 2016.
"Solid job growth and favorable interest rates will drive a strong demand for housing next year," CAR President Geoff McIntosh said. "However, a persistent shortage of homes for sale and increasing home prices will dictate the market as housing affordability diminishes for buyers struggling to get into the market."
Additionally, CAR expects rates for the 30-year fixed mortgage to remain low by historical standards and average 4.3% in 2018, an increase from the 4% average in 2017 and 3.6% in 2016. Meanwhile, the median home price is expected to grow 4.2% next year to $561,000 following a projected increase of 7.2% in 2017 to $538,500.
"This year's housing market can be told as a tale of two markets – the inventory-constrained lower end and the upper end that's non-inventory-constrained," CAR Senior Vice President and Chief Economist Leslie Appleton-Young said. "This trend is likely to continue into 2018, as active listings have declined across all price ranges for the past two years, but is most obvious at the lower end. With tight inventory being the new 'norm' for the past few years and at least the upcoming year, we'll continue to see fierce competition driving up prices, leading to lower affordability and weaker sales growth."
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CAR expects sales of existing single-family homes to see a modest 1% increase in 2018 to 426,200 units from the projected sales figure of 421,900 for 2017. The 2017 projection is a 1.3% increase from the pace of 416,700 sales in 2016.
"Solid job growth and favorable interest rates will drive a strong demand for housing next year," CAR President Geoff McIntosh said. "However, a persistent shortage of homes for sale and increasing home prices will dictate the market as housing affordability diminishes for buyers struggling to get into the market."
Additionally, CAR expects rates for the 30-year fixed mortgage to remain low by historical standards and average 4.3% in 2018, an increase from the 4% average in 2017 and 3.6% in 2016. Meanwhile, the median home price is expected to grow 4.2% next year to $561,000 following a projected increase of 7.2% in 2017 to $538,500.
"This year's housing market can be told as a tale of two markets – the inventory-constrained lower end and the upper end that's non-inventory-constrained," CAR Senior Vice President and Chief Economist Leslie Appleton-Young said. "This trend is likely to continue into 2018, as active listings have declined across all price ranges for the past two years, but is most obvious at the lower end. With tight inventory being the new 'norm' for the past few years and at least the upcoming year, we'll continue to see fierce competition driving up prices, leading to lower affordability and weaker sales growth."
Related stories:
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Another spluttering month for California home sales
