Uncategorized January 24, 2016

2016 National Real Estate Forecast

Following the housing market's best year in nearly a decade, existing-home sales are forecasted to expand in 2016 at a more moderate pace as pent-up buyer demand combats affordability pressures and meager economic growth, according to National Association of Realtors® Chief Economist Lawrence Yun in a newly-released video on his 2016 housing market expectations. Yun points to pent-up demand, sustained job growth and improving inventory conditions as his reasons for an expected gain (from 2015) in new and existing home sales.

Despite his forecasted increase in sales, Yun cites rising mortgage rates, home prices still outpacing wages and shaky global economic conditions as headwinds that will likely hold back a stronger pace of sales.


Existing home sales: 5.3 – 5.4M*

Median home prices: up 4.0% – 5%

Housing starts: 1.25 – 1.35M*

Mortgage rates: expected to reach 4.5%  by year end

*Existing home sales and housing start in billion dollars


Overall purchase demand may lift 2016 home sales to the best year since 2007. Nationally, home prices will likely rise at a quicker rate than inflation, but not at the same rate as last year. The CoreLogic Home Price Index showed a year-over-year increase of 6 percent in the last 12 months; however, 2016 is only expected to see increases of 4-percent. This increase in home sales and home prices can be attributed improved economy.

As we approach the start of 2016, the consensus view among economists is that economic growth will continue, and the U.S. will enter an eighth consecutive year of expansion in the second half of next year. Most forecasts place U.S. economic growth at 2 and 3 percent during 2016, creating the best back-to-back years for employment since 1998-99, and adding to thegenerally upward movement of the real estate market.


The graph above shows the 2004—2007 anomaly that was the 2004—2007 bubble.