FEATURED ARTICLE: 2019 HOUSING OUTLOOK
U.S. HISTORICAL NEW HOME PRICES & APPRECIATION
MEDIAN NEW HOME SALES PRICE
ANNUAL HOME PRICE APPRECIATION
15%
$350,000
$300,000
10%
$250,000
5%
$200,000
0%
$150,000
-5%
$100,000
-10%
$50,000
-15% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
$0
able expectation. The homeowner- ship rate is a slow-moving residual economic indicator; it does not give much information about other near- term economic developments. In the long run, it does have implications for household net worth and thus wealth effects.
2016 at 62.9 percent, homeowner- ship rates have risen significantly to 64.4 percent. I fully expect the rate to continue rising back up to its long- term average of around 65 percent and, likely, move even higher as the millennial generation continues to buy homes.
What is your outlook for homeownership rates in
2019? Why? Implications? 4
TERRAZAS: We expect new home sales to slow in 2019 averaging around 505,000 units SAAR and the median price of new homes sold in 2019 to fall about 3.8 percent, driven primarily by a shifting regional composition of new home sales. New home sales plateaued in 2018 and builders began to hold off on starts. Rebuilding in several regions devas- tated by natural disasters in 2018 should boost home building but not enough to offset a general slowdown. KIEFER: The market for new sin- gle-family homes needs to adjust in 2019. We’re expecting to see about a 10 percent increase in new home
home sales. In 2018 however, despite the added pressure from material and labor costs, new home sales proved resilient to rising rates and are down just 3.4 percent year- to-date through September. The accumulation of past interest rises and further increases in 2019 are likely to start to fully impact the in- dustry. Thus, we expect new homes sales to underperform existing homes sales, likely falling more the 5 percent. As builders have more pricing and incentive flexibility, new home prices could actually decline in 2019, the extent of which will de- pend on the mix of homes and the extent of discounting.
sales in 2019, but that’s going to re- quire homebuilders to continue the trend of a moderation in the size of newly constructed homes. Look for more growth in the more moderately priced new home segment. If build- ers deliver into that segment, then new home sales will pick up in 2019. If builders do shift to smaller, less expensive homes, then the medi- an sales price of new homes may decline, but I would expect a con- stant quality index (that adjusts for the mix of sales) would post modest growth in 2019.
KAPFIDZE: Homeownership rates will likely continue their recent ad- vance given only moderate declines in home sales. An increase of half a percentage point would be a reason-
GARDNER: After bottoming out in
Economist
2019 Homeownership Rates
“The U.S. homeownership rate has ticked up in 2018, and I expect that to continue in 2019. We looked at young adult homeownership and found significant pent-up demand amongst those ages 25 to 34.”
Zandi
Unchanged Small gain
Yun
Terrazas
Up to 64.7% by year-end
Kiefer
Up
Kapfidze Gardner Duncan
Up half a percentage point Up toward 65% or higher Up but at a slower rate
LEN KIEFER
KAPFIDZE: New home sales are more rate sensitive than existing
12 think realty housing news report
january 2019 13
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