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demographics and the balance between supply
and demand.
Meanwhile home remodeling is posting strong
market conditions, due in part to strong demand
in the wake of the terrible hurricanes and wildfires
in 2017. Residential remodeling activity is expected
to register a 7% gain in 2018 over last year.
HEALTHY HOUSING
MARKETS
HOME PRICES UP,
Delving beneath the national numbers, David AFFORDABILITY DOWN
Berson, senior vice president and chief economist
at Nationwide Insurance, said the vast majority
of local housing markets are healthy and faring CoreLogic Chief Economist Frank Nothaft also
well. expects mortgage interest rates and home prices
Berson lists 324 markets as positive, 69 as to post moderate increases in 2018, which in turn
neutral and just 7 as negative. While job gains, will lessen housing affordability.
household formations and mortgage markets Like Berson, Nothaft expects that the benchmark
still look good, he noted that rapid price increases 30-year fixed-rate mortgage will average 4.5% by
are concerning. the end of the year.
Comparing current conditions with the housing “Higher rates are not just a gradual erosion of
boom a decade ago, Berson noted that the affordability, but also impact owner mobility,”
market is supply constrained today, but wasn’t said Nothaft. “That has implications on the overall
during the boom. And mortgage credit, while inventory for sale. Supply has been tight and for-
more readily available than just a few years ago, sale inventory will continue to remain tight.”
remains far limited relative to the market peak in The ongoing tight inventory in the housing
2007.
market will cause home and rent price growth
While he anticipates a slightly more rapid rise to outpace inflation, he added, with nationwide
in mortgage interest rates this year, Berson said it home prices rising an average of 5% and rental
should not hurt housing activity. prices posting a 3% increase.
“Mortgage rates are expected to rise from 4% The biggest growth for new home sales are
to 4.5% by the end of year,” he said. “However, occurring in the South and West, where many of
housing demand remains strong and wages are these metro areas benefit from solid job growth,
solid, and this will more than offset the negative relative affordability and favorable weather.
effects from rising rates.” Nothaft listed Houston, Dallas, San Antonio,
Austin, Phoenix, Atlanta and Charlotte as the top
seven major markets in terms of new home sales.
Meanwhile, he reported that overall mortgage
delinquency and foreclosure rates are at their
lowest levels in more than a decade, but that is
a different story for markets pummeled by last
year’s devastating hurricanes.
“Houston’s delinquencies almost doubled
year-over-year, and that is due almost entirely to
Hurricane Harvey,” said Nothaft.
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