June may be National Homeownership Month, but it coincides with bad news for potential homebuyers this year.
By multiple measures, home prices have continued to rise and are projected to climb throughout 2018. They also will continue outpacing inflation and wage growth.
The bad news for home shoppers
The National Association of Realtors reports that the median price for existing homes of all types reached $257,900 in April, an increase of 5.3 percent compared with April 2017. The median price for existing single-family homes reached $259,900 in April, a year-over-year increase of 5.5 percent.
Real estate brokerage Redfin reports that, based on the 174 housing markets it tracks, the median home sale price reached $302,200 in April, a year-over-year increase of 7.6 percent. This marks the first time this metric has exceeded $300,000.
Meanwhile, forecasts suggest this trend will continue throughout 2018. A recent Reuters poll found that analysts expect the S&P CoreLogic Case-Shiller 20-City Composite Home Price NSA Index to rise 5.7 percent this year. This commonly cited index is based on residential property values across 20 major U.S. markets.
In comparison, another recent Reuters poll shows that economists predict earnings will grow by only 2.8 percent and inflation will grow by 2.5 percent this year, on average.
Sal Guatieri, senior economist at BMO Financial Group, tells Reuters:
“We are not seeing a temporary phenomenon. House prices have been outrunning family incomes for several years in the U.S. and while demand has cooled off a bit, the supply side is still very tight. I think house prices will continue to outrun family incomes for at least another year …”
Bad timing compounds this bad news: Mortgages interest rates have been creeping up so far this year as well and are expected to continue rising.
The good news?
Reuters reports that experts predict home prices will also rise in 2019 and 2020. However, the rate at which prices are rising is expected to drop after 2018.
Specifically, experts expect that home prices will rise by:
- 5.7 percent in 2018
- 4.3 percent in 2019
- 3.6 percent in 2020
If you shopping for a home and are looking for the best mortgage rate, check out our Solutions Center. There, you can compare mortgage rates to find the home loan that is right for you.
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