FEATURED ARTICLE: 2019 HOUSING OUTLOOK
the third quarter of 2018 the median square footage for new homes was the smallest in six years. As a result, we expect new home sales to increase 1.2 percent in 2019 to 630,000. As is the case with existing home sales, we expect to see moderating home price gains for new homes sold in 2019. The implication is that we see more room to grow in the new home market in 2019, which could send sales to the highest level in the expansion.
Question 2.
KAPFIDZE: Rates will reduce demand, but a vibrant labor market (hopefully with more robust wage growth) and increasing share of sales to millennials who are entering their peak homebuying years will support demand. Expect rates to prevail and sales to contract marginally by 2 to 5 percent. Home price growth will moderate to about 3 percent, but we don’t expect a national decline. GARDNER: Unlike this year — where I expect to see home sales contract by 2.2 percent — I expect sales to rise by 1.6 percent in 2019, and my current price forecast suggests home values increasing by 4.4 percent. Home price
in total home sales from2018 to 2019, driven almost entirely by new home sales. Existing home sales look about in line with long run potential and so should grow about in line with age-adjusted households. With the population growing and the millen- nial generation showing up in the housing market, I would expect to see modest growth of 1 percent or so in existing home sales. Home price growth has moderated recently, and I expect that trend to continue. In 2019 national average existing home price appreciation should be about 4 percent, though that will vary a lot depending where in the country you’re living.
What is your outlook for new home sales and prices
in 2019? Why? Implications? 3
“With the population growing and the millennial generation showing up in the housing market, I would expect to see modest growth of 1 percent or so in existing home sales.”
YUN: New home sales will rise 11 percent as home builders will need to add inventory. Despite the slowdown in late 2018 for new home purchases, there is still inadequate home building compared to pop- ulation growth. As builders shift towards lower-priced homes — to the degree they can since labor, land, and material costs are rising — they can easily find buyers. Building McMansions will be problematic.
GARDNER: I am predicting new home sales will grow by 6.6 percent in 2019 and prices will rise by 3.5 percent. We have seen a fairly consis- tent rise in new home starts, but they remain well below where I would like them to be. Builders are still strug- gling with high costs for land, labor and materials, and that will hold them back from starting signifi- cantly more homes.
LEN KIEFER
ZANDI: Same response as to
growth will slow given the fact that we have reached an affordability “ceiling”. This slowing of home price appreciation, in concert with rising wages, should lead to more buyers stepping up next year.
Economist
2019 New Home Sales
2019 New Home Prices
Zandi
Flat
Low single-digit increase
DUNCAN: New home sales performed better than existing home sales in 2018. The new home inventory has increased on an annual basis every month for over five years, although new home in- ventory as a percentage of households has remained
Yun
Up 11%
N/A
Terrazas
Slow to 505,000 units (SAAR)
Down 3.8%
U.S. HISTORICAL HOME PRICES & APPRECIATION
Kiefer
Up 10%
Median down, Constant Quality Index up
Kapfidze Gardner Duncan
Down 5% Up 6.6%
Down
MEDIAN HOME SALES PRICE
ANNUAL HOME PRICE APPRECIATION
Up 3.5%
$300,000
20%
Up 1.2% to 630,000
Moderating gains
15%
$250,000
“As builders shift towards lower-priced homes — to the degree they can since labor, land, and material costs are rising — they can easily find buyers. Building McMansions will be problematic.”
historically low. Market conditions in 2019 likely will continue to be a chal- lenge for home builders, with rising construction and regulatory costs, and a shortage of skilled labor. Some building material prices, such as soft- wood lumber, have eased in recent months, which should allow build- ers to offer more favorable pricing, hopefully leading to an improvement in building and sales activity going into 2019. One positive development in the new home market is that home build- ers appear to be responding to strong first-time buyer demand by construct- ing smaller homes. The typical new single-family home size has been fall- ing since reaching a peak in 2015. In
10%
$200,000
5%
LAWRENCE YUN
$150,000
0%
-5%
“As builders have more pricing and incentive flexibility, new home prices could actually decline in 2019, the extent of which will depend on the mix of homes and the extent of discounting.”
$100,000
-10%
$50,000
-15%
TENDAYI KAPFIDZE
$0
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10 think realty housing news report
january 2019 11
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