Buying a home will be more expensive in 2019 as mortgage rates and home prices rise, according to economists with the National Association of Realtors® and realtor.com®.
NAR’s chief economist Lawrence Yun predicts home prices will continue to rise in 2019, but at a slower rate, with the national median home price increasing to $266,800, up 3.1% from 2018. Danielle Hale, chief economist at realtor.com®, provides a similar forecast, predicting that prices will rise 2.2% nationally. These increases are down from nearly 5% in 2018 and more than 5% in 2017. In addition, Yun expects home sales to flatten and become more stable in 2019, rising by just 1%.
Hale said the 2019 housing market will see modest inventory gains of less than 7%, but many of those properties will be in the mid to higher-end price range. And with mortgage rates expected to hit 5.5% by the end of the year, Hale estimates that the expected increase in prices and interest rates translates to an 8% increase in the average monthly mortgage payment. That will put homeownership out of reach for some, including cash-strapped first-time home buyers. However, as more buyers are priced out of the market, those who are able to remain will find less competition.
In recent interviews with USA Today, both Hale and Yun offered some advice for sellers and buyers in 2019:
Hale said sellers should price their home realistically and be mindful of competition, especially for more expensive properties, and be prepared to reduce the price or offer other incentives to close a deal.
Since there is less competition among buyers and will be more inventory, buyers should take their time to find a home that fits into their budget, Yun said.
Meanwhile, there is positive news. The overall health of the economy is good, Yun said in presenting his 2019 housing and economic forecast in November 2018. Yun cited low unemployment, record high job openings, historically low jobless claims and wages starting to increase as positive signs supporting the housing market, even as interest rates rise.
If you are considering listing your property in 2019 or looking for your dream home, call Mary Anne.