Between today’s growing economy and reports of an expanding housing industry, experts remain optimistic about this year’s housing market. In fact, this is the first time in years that an “overheating” industry has become a possibility. As a result, the Mortgage Bankers Association (MBA) has been forced to update its rate increase predictions from three to four times this year.
Although mortgage rates will rise with inflation throughout the year, MBA Chief Economist, Mike Fratantoni expects job and wage growth to keep the purchase market strong. The Association’s expectation, according to Fratantoni, “is that wage growth will continue as the unemployment rate moves below 4 percent.” Then, with the ability to keep up with rising mortgage rates, potential home buyers are expected to remain in the market to buy a home. Home purchase origination growth is even predicted “to continue over the next few years,” reports Fratantoni. “We could see an early start to the spring home-buying season.”
As the number of potential buyers continues to grow, industry experts worry that supply will remain an issue throughout the upcoming months. In fact, according to the National Association of Realtors, only 1.48 million homes are currently available for sale - which is the lowest recorded inventory in years. “People are not putting their homes up for sale, and there are an increasing number of consumers who want to buy homes,” Fratantoni commented. “We are simply not meeting demand, and that is going to continue to drive up home prices.”
One of the main reasons why supply cannot keep up with demand is the continuation of construction labor shortages. Housing market predictions, however, show possibility that housing starts will pick up pace later this year. Home buyers may even see a three percent increase in housing starts overall, with a 7 percent increase in single-family starts.
No matter how the housing market progresses throughout 2018, it’s important to stay up-to-date on the latest news. For more information on the mortgage industry, or to learn more about home financing, contact one of our mortgage specialists and subscribe to our blog today.