With demand for housing on the rise, and inventory low across the country, it’s been a tough market for buyers lately. Home sellers are courting more bidding wars than ever, and selling their homes for record prices. Meanwhile, new homes simply aren’t being built quickly enough to keep up with the needs of homebuyers, further compounding housing shortages. Fortunately, there’s good news on the horizon. According to reputable housing market watchers, home sales are projected to rise in 2019.
Here’s what we’re seeing and what it means for buyers:
Home Sales Set to Increase in 2019
Projections from Freddie Mac, Fannie Mae and the Mortgage Bankers Association all show an increase in home sales in 2019. A lot of these homes entering the market will be new builds. However, even with these new homes entering the market, inventory shortages are projected to continue. Sam Khater, chief economist at Freddie Mac, explains to DS news, “Despite home sales rising at a good clip on a year-over-year basis, the construction of new housing is barely above the recession level. We’re just not building fast enough to keep up with the pace of demand, even though we are nine years into the economic expansion.”
The good news: There will be some new homes on the market in 2019, which should help slow price increases a bit.
The not-so-good news: Without enough new housing to meet the swelling demand of buyers, most economic signs point to continued affordability problems across the U.S.
What Increased Home Sales Means for Buyers
So what does this mean for you, a home buyer?
Affordability will continue to be an issue: We wish we could tell you that housing will be more affordable next year, but according to the data, it’s not looking that way. New builds should help slow cost increases, but many — if not most — housing markets will still have inventory shortages. With that said, you should have more homes to choose from while shopping. But the downside is, you may also have to contend with more competition, as the economy continues to strengthen and more buyers enter the market. Of course, every market is different. So make sure to keep an eye on your specific market. Look into inventory rates and housing starts (AKA how many homes are being built) in your city. These stats should give you an idea of how competitive your market will be in 2019.
Buying sooner may give you an advantage: We’ve written on the blog recently about how now is a great time to sell and upgrade your home. With interest rates projected to rise through the remainder of 2018 and into 2019, buyers who are ready to take the plunge could save thousands with today’s lower rates. If your financial picture is sound, and you’re ready to go, now may be a good time to make the jump into a new home. Home prices and mortgage rates will likely continue to rise over the next year. The longer you wait, the more it could end up costing you in the long run.
Remember, there’s no “perfect time” to buy: Mortgage rates and home prices are not the end-all-be-all. There is no perfect time to buy a home. If you’re not financially ready, it won’t matter how low mortgage rates are. It’s always recommended that you strengthen your financial portfolio as much as possible before applying for a mortgage. That means getting your credit score up, saving up for a solid down payment, and making sure you have all your financial ducks in a row, so to speak. The larger your down payment and the stronger your credit score, the lower your mortgage rate will be. For more on rates, check out our recent post Unexpected Rate Increases and How to Protect Yourself.
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