2017 Housing Market to Be Best in a Decade
Despite the hiccups, 2017 is expected to be the best year for the housing industry in a decade, according to a new report from Freddie Mac, reports The M Report. Freddie Mac’s November 2017 Outlook revealed that optimism remains, despite inventory shortages, high demand, and ongoing labor and construction woes.
A strong year by a “variety of measures”
The government-sponsored enterprise report forecasts 1.2 million housing starts this year, as well as 6.13 million home sales. The article says both figures are expected to tick up in 2018 and 2019, thanks to the expectation that new construction activity will aid current inventory shortages. Across a “variety of measures,” 2017 is set to close the year out strong.
Market moderation for 2018, 2019
According to Sean Becketti, chief economist for Freddie Mac, the industry may be at a peak. “It’s unlikely the economic environment will be much more favorable for housing and mortgage markets in 2018 and 2019,” Becketti said. The economist said mortgage interest rates are expected to tick up gradually over the next few years, as is construction. This will in turn lead to a “moderation” in house price growth. Refinance activity will “drop to very low levels and the mortgage market will be dominated by purchase activity,” he concluded.
Too early to know effects of tax reform
In terms of the current political climate, Freddie Mac noted tax reform could seriously affect predictions, but it was still too early to tell. “Considering the current level of uncertainty surrounding tax reform we have not factored in the potential effects of recent tax plans,” said the report. Still, analyses showed a “large variation” in impact “based on assumptions about which provisions will be enacted and how the economy will respond.”