Housing and Mortgage Trends to Watch in 2018

By December 20, 2017Mortgage Tips

Here are a few housing and mortgage trends to expect in 2018, as compiled by NerdWallet.com:

1. Home prices decelerate.

  • This is good news for first-time home buyers.
  • Home-price appreciation is expected to cool down.
  • The median forecast among six industry and lender groups is for a 4.1% increase in existing home prices nationwide, compared to 6.3% in 2016 and approximately 6% in 2017.
2. Single-family housing starts will rise sharply.

  • Economists expect the construction of single-family houses to rise sharply in 2018, based on building permit applications.
  • The median estimate has single-family housing starts rising about 8% in 2018, to roughly 912,500 new houses.
3. More homes for sale.

  • Home buyers are struggling to find houses for sale.
  • The shortages are especially acute for the kinds of homes that first-time buyers tend to get.
  • But there’s some hope for 2018: Realtor.com predicts that the housing supply pinch will begin to ease late in the year. “It looks like we could get to a point where we’re seeing growth in inventory sometime in the fall of 2018,” says Danielle Hale, chief economist for Realtor.com.
4. Home sales could rise.

  • Resales of existing homes are expected to rise modestly in 2018.
  • The median estimate is that existing home sales will rise 2.5%, to 5.6 million units. 
  • Sales of new homes are expected to rise a median of 7%, to 653,500 newly built single-family houses.
5. Mortgage rates head up.

  • Mortgage rates are expected to rise in 2018.
  • CoreLogic averaged six forecasts of mortgage rates, arriving at a consensus view that the 30-year fixed will average 4.7% in December 2018. In November 2017, the 30-year, fixed-rate mortgage averaged 4.07%.
  • Interest rates are notoriously resistant to prediction, though. At the beginning of 2017, most people expected mortgage rates to rise steadily throughout the year. And they did rise — for a few weeks.
  • The average 30-year fixed peaked in mid-March 2017 at 4.58%, according to NerdWallet’s daily survey. Then it declined, dipping slightly below 4% a few times in the summer, before moving upward slightly in the fall.
6. Affordability declines.

  • If, as expected, home prices and mortgage rates go up in 2018, homes will be less affordable.
  • For example, if mortgage rates rise to 4.7% toward the end of 2018, and the median price of existing homes rises by 4.1%, then monthly mortgage payments for a typical house would rise substantially.
  • But according to an Urban Institute analysis, middle-class families in much of the country still have some financial wiggle room if rates and prices rise in 2018.
  • Most home buyers don’t appear to stretch to the limits of affordability, the Urban Institute wrote.
7. Security headaches continue.

  • The problem of thieves stealing down payments from home buyers by combining email hacking with wire fraud will continue in 2018.
  • Complaints of this type of wire fraud skyrocketed by 480% in 2016, according to the 2016 annual report (the latest available) from the FBI’s Internet Crime Complaint Center.
  • Lenders and title companies say the problem worsened in 2017, and that they fend off this form of fraud constantly.