A team of housing analysts and economists have offered a U.S. home-price forecast extending into spring 2019 that’s fairly “normal” by historical standards. This follows several years of above-average price growth within the nation’s housing market.
U.S. Home Price Forecasts Through Spring 2019
Home values across the country have been rising steadily for the last few years. In many cities and towns, this is the result of limited inventory and strong demand. Prices have risen at an above-average pace for the last couple of years, according to numerous sources.
In May 2018, the real estate information company Zillow reported that the median home value for the nation as a whole rose by 8% over the previous 12 months. Those are above-average gains, when you look at annual appreciation over the last few decades. Historically, home prices in the U.S. have risen by around 5% annually.
Some cities experienced double-digit price growth during 2017, as well as the year before. For instance, prices in Atlanta, Georgia rose by 12.4% over the last year, according to Zillow. In Seattle, the median home value climbed by a whopping 17% during that same period. Those are extreme cases of annual price growth. We’ve seen similar “abnormal” trends in many other cities across America.
And that brings us to the latest home-price forecasts for the U.S. Recent predictions suggest that year-over-year appreciation might be slowing to a more “normal” pace.
Economists from Zillow, for example, recently offered a forecast for 4.2% growth over the next 12 months or so. This outlook was issued in May 2018 and therefore extends into the spring of 2019.
According to the company’s website: “United States home values have gone up 8.0% over the past year and Zillow predicts they will rise 4.2% within the next year.” (Quote obtained on May 17, 2018)
The nationwide median price was up to $213,000 as of May 2018.
An Unbalanced Supply-and-Demand Situation
While the latest round of U.S. home-price forecasts suggests that there is some normalizing within the housing market, the inventory situation remains abnormal. In many cities across the country, real estate markets are experiencing an unusually low level of supply right now.
In such markets (and there are a lot of them), there just aren’t enough homes listed for sale to meet the demand from buyers. This is putting upward pressure on prices, and it’s partly why house values have risen so much over the last couple of years.
According to economists and housing analysts, a “balanced” and healthy real estate market has somewhere between five and six months of supply. This means it would take five to six months to sell off all properties currently listed for sale, if no new ones came onto the market in the meantime — theoretically speaking.
As of spring 2018, most cities across the U.S. had less than a five-month supply of homes for sale. Some cities are well below that level. Some of the tightest markets — like Seattle, Sacramento and Denver — had less than a two-monthly supply of homes for sale, as of April 2018.
This is partly why the latest U.S. home-price forecasts, extending into 2019, are calling for additional gains over the coming months. Short supply and steady demand are putting upward pressure on home prices, and these conditions could carry over into 2019 for many U.S. cities.
Still, it’s good to see some home-price forecasts calling for somewhat normal growth over the next year. House prices need to cool down a bit, for the sake of long-term sustainability and affordability.
Disclaimer: This article includes trends, predictions and forecasts relating to house values in the U.S. These forward-looking statements were provided by third parties not associated with our company. As a general rule, the Home Buying Institute makes no claims or assertions about future conditions with the real estate market or broader economy.