Supply-Demand Imbalance: The New Normal of American Housing Market?

supply-demandAs home prices continue to rise—and with no signs of slowing—housing experts polled by Zillow are predicting home appreciation to climb an additional 4.1% in 2018. One year ago, these same experts predicted just 3.0% growth in 2018.

This increase in projected price growth is almost entirely due to the lack of homes for sale. According to the report, the number of available homes has fallen for 33 consecutive months.

“The U.S. is in the middle of a supply crisis,” the report reads.

A major cause for the supply-demand imbalance has been a lack of single-family home construction. In fact, respondents said their biggest surprise of the 2017 housing market was the slow pace of single-family home building. Unfortunately, most expect that to continue in the new year.

Zillow Senior Economist Aaron Terrazas touched on the persistently thorny issue of supply-demand with U.S. housing.

“The American labor market is stronger than it’s been in decades and Americans, particularly young Americans, are increasingly feeling confident enough to buy homes,” Terrazas said. “Home building has not kept pace with this surge in demand and remains well below historical norms. We don’t expect these demand-supply imbalances will fundamentally shift in 2018.

“Unless there is a fundamental shift in the number and types of homes for sale, this is the new normal of the American housing market.”

The experts polled also expect the low mortgage rates of 2017 to increase slightly next year. The projection is for mortgage rates to to hover around 4.5 percent in 2018, up from 3.9 percent this year.

By | 2017-12-30T00:03:46+00:00 December 30th, 2017|Real Estate Advice, Real Estate News|