The current state of the US housing market can be summed up in three key phrases: strong demand, tight inventory, and unsatisfied millennials
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The current state of the US housing market can be summed up in three key phrases: strong demand, tight inventory, and unsatisfied millennials.
Ahead of the State of the Union address next week, realtor.com has published its State of the Housing Union analysis revealing the strengths and weaknesses of the current market.
"The macro-factors that have defined real estate in recent years – strong demand and weak supply – continue to set the tone for the industry," said Joe Kirchner, senior economist for realtor.com. "The new tax law that caps the mortgage interest deduction and the deductibility of state and local taxes can be expected to impact the upper-end market in 2018 – precisely how and the extent of which remain to be seen."
Economy remains strong but housing inventory lags
The strong economy including job creation, is driving demand for homes and sales should be soaring. But inventory is preventing the market from reaching its full potential.
With inventory down 8.8% year-over-year in 2017, sales could only manage a 1.1% rise compared to the 3.8% gain of 2016, and prices surged 5.8% compared to the 5.1% of the previous year.
Although new construction starts were higher, they did not keep up with supply and the report highlights that builders need to supply the right kind of homes.
"Builders will need to focus more on homes geared for moderate incomes, partner with the government on initiatives to transform distressed urban neighborhoods and overcome labor shortages through a combination of workforce development training and pressure to ease artificial restrictions on the supply of labor," added Kirchner.
Ahead of the State of the Union address next week, realtor.com has published its State of the Housing Union analysis revealing the strengths and weaknesses of the current market.
"The macro-factors that have defined real estate in recent years – strong demand and weak supply – continue to set the tone for the industry," said Joe Kirchner, senior economist for realtor.com. "The new tax law that caps the mortgage interest deduction and the deductibility of state and local taxes can be expected to impact the upper-end market in 2018 – precisely how and the extent of which remain to be seen."
Economy remains strong but housing inventory lags
The strong economy including job creation, is driving demand for homes and sales should be soaring. But inventory is preventing the market from reaching its full potential.
With inventory down 8.8% year-over-year in 2017, sales could only manage a 1.1% rise compared to the 3.8% gain of 2016, and prices surged 5.8% compared to the 5.1% of the previous year.
Although new construction starts were higher, they did not keep up with supply and the report highlights that builders need to supply the right kind of homes.
"Builders will need to focus more on homes geared for moderate incomes, partner with the government on initiatives to transform distressed urban neighborhoods and overcome labor shortages through a combination of workforce development training and pressure to ease artificial restrictions on the supply of labor," added Kirchner.
