SANTA CLARA, Calif.,
Jan. 25, 2018 /PRNewswire/
-- Ahead of next week's State of the Union address,
realtor.com® today released its own "State of the
Housing Union," which shows the strong U.S. economy and
unprecedented housing shortage pressuring potential home buyers
striving to attain the American Dream. According to the analysis,
strong buyer demand, constrained inventory, and ready-to-buy first
timers are the key underlying dynamics driving today's housing
market.
"The macro-factors that have defined real estate in recent years
– strong demand and weak supply – continue to set the tone for the
industry," said Joe Kirchner, senior
economist for realtor.com®. "The new tax law that
caps the mortgage interest deduction and the deductibility of state
and local taxes can be expected to impact the upper-end market in
2018 – precisely how and the extent of which remain to be
seen."
A robust and growing economy
Leading indicators point to a solidly upbeat U.S. economic
story. Consumer confidence has spiked, according to the Conference
Board's consumer confidence index, as unemployment fell to its
lowest level since 2000 (4.1 percent) and the economy added jobs
for a record 86th consecutive month, according to
November data from the U.S. Labor Department. At the same
time, the U.S. stock markets reached all-time highs over the last
few months and retail sales (dollars spent in stores, in
restaurants and online) capped a strong year with 2017 holiday
sales that increased more than 5.5 percent year over year,
according to the National Retail Federation.
Home prices and sales held back by low inventory
Nevertheless, sales growth of existing U.S. homes actually
cooled, only increasing 1.1 percent in 2017 as compared to a 3.8
percent gain the previous year. Prices appreciated 5.8 percent on
average during 2017, compared to 5.1 percent a year earlier.
Inventory fell 8.8 percent nationally in the 12 months ending
Dec. 31, 2017 versus a 10.7 percent
dip during the comparable period a year earlier, and tight supply
was the single biggest factor affecting the market. Even a sharp
increase in new construction – single-family housing starts jumped
8.4 percent and 10.2 percent the previous year – couldn't offset
inventory shortages.
Millennial demand is strong but limited by constrained
supply
Realtor.com®data shows millennial aspiring first time
home-buyers fell victim to the inventory pinch in the last 12
months. Spurred on by steady employment and life events, such as
getting married and starting a family, many of these buyers
actively pursued home purchases but hit the wall of tight
inventory. With the majority of new construction in mid to upper
tier price points, new homes have provided very limited relief to
these would-be home owners.
"Builders will need to focus more on homes geared for moderate
incomes, partner with the government on initiatives to transform
distressed urban neighborhoods and overcome labor shortages through
a combination of workforce development training and pressure to
ease artificial restrictions on the supply of labor," added
Kirchner.
Red vs. blue states in 2017
In a comparison of red and blue states, blue states saw higher
home price growth last year, at 9.1 percent, than red states, at
5.9 percent. They also saw stronger sales growth at 1.6 percent
versus 0.7 percent in red states.
Blue states – California and
Illinois and the tri-state region
of New York, New Jersey and Connecticut, for example – skew more urban and
suburban than largely rural red states. Highly developed cities,
towns and neighborhoods in blue states make finding buildable
property extremely challenging, especially with demand at current
levels. This supply-and-demand dynamic is the principal reason
price appreciation in blue states outstripped price increases in
red states in 2017.
Blue states also have some challenges ahead with the tax bill.
Last year, 2.5 percent of all mortgages in blue states were more
than $750,000 and will be directly
impacted by the capping of the mortgage interest deduction in 2018.
Conversely, only 0.4 percent of mortgages in red states will be
impacted.
Realtor.com® tracks and analyzes market trends and
makes timely and insightful information available at
realtor.com/research. Data snapshots, affordability
distribution and market "hotness" are just some of the resources
available at the portal.
About realtor.com®
Realtor.com® is a leading online real estate destination
operated by News Corp [NASDAQ: NWS], [NASDAQ: NWSA]; [ASX: NWS];
[ASX: NWSLV] subsidiary Move, Inc. Realtor.com®, a
trusted resource for home buyers, sellers and dreamers, offers the
most comprehensive source of for-sale properties, among competing
national sites, and the information, tools and professional
expertise to help people move confidently through every step of
their home journey. It pioneered the world of digital real estate
20 years ago, and today helps make all things home simple,
efficient and enjoyable. Realtor.com® is operated by
Move under a perpetual license from the National Association of
REALTORS®. For more information, visit
realtor.com®.
Contact: Lexie Holbert,
Lexie.Puckett@move.com
View original content with
multimedia:http://www.prnewswire.com/news-releases/strong-demand-tight-inventory-and-unsatisfied-millennials-define-todays-state-of-the-housing-union-300588053.html
SOURCE realtor.com