There are three things we should look at:
- #1 New home sales are at the highest level in a decade.
- #2 Sales of previously owned homes are at the highest level in more than a decade.
- #3 Starts of single-family homes are the strongest in a decade and applications to build such properties advanced at the fastest pace since August 2007. More than a decade.
Whether we’re looking at new home sales, existing home sales, or new construction home starts, all the numbers are greater than they have been in at least the last ten years. So we can see that 2017 finished off very strongly, and many in the industry believe 2018 is going to be a great year. There are a couple of things that we have to take a look at as we move into 2018. First, let’s take a look at mortgage rate projections.
If we look all the way to the right of the chart above you’ll see the average of all four projections. Now look at the 2018 fourth quarter forecast and we see that the projected average is over 4 1⁄2%.
Currently, interest rates are sitting just about 4%.
Will this impact the market? The chart below shows total home sales for 2017 and what each of the top industry experts is projecting for 2018.
As you can see, National Association of Realtors, Freddie Mac, the Mortgage Bank Association and Fannie Mae all see a dramatic increase in the number of houses sold in 2018. It’s clear to see that the experts who came up with these projections don’t seem to think that’s the market will be affected by an increase in interest rates.
Probably the most important thing we can look at as well is “What does the buyer think right now“.
We can see from the Buyer Traffic chart above (December numbers aren’t in yet) that in September, October, and November of 2017, there was more buyer traffic, more buyer activity, than at any time at all during the rest of the year. Including the spring buyer’s market (March, April, and May). So, there are more buyers out there right now shopping for houses than there was last spring.
Experts are saying they believe that 2018, as long as more listing come into the market, could be a phenomenal year. As a matter of fact, Bloomberg Business said this: “America’s housing market is gearing up for a robust year ahead. Builders are more optimistic, demand is strong and lean inventory is keeping prices elevated.