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Economic Forecasts

House Prices Show Steady Climb

Kiplinger's latest forecast on housing starts and home sales


GDP 2.9% pace in '18, up from 2.3% in '17 More »
Jobs A tight labor market will make hiring more difficult More »
Interest rates 10-year T-notes at 3.3% by end '18 More »
Inflation 2.6% in '18, up from 2.1% in '17 More »
Business spending Up 7% in '18, boosted by expanded tax breaks More »
Energy Crude trading from $65 to $70 per barrel in July More »
Housing Price growth: 5.0% by end of '18 More »
Retail sales Growing 4.9% in '18 (excluding gas and autos) More »
Trade deficit Widening 5%-6% in '18 More »

Total housing starts fell 3.7% in April because of a slowdown in apartment building, to a seasonally adjusted annual rate of 1.29 million. A pullback on multifamily construction is solely responsible for the decline. Multifamily starts slumped 11.3% from March. Meanwhile, despite flat starts in April, single-family construction in the first four months of 2018 was 8.3% higher than in the same period last year. The bulk of that increase has been in the West and the South.

New-home sales dipped in April, following a strong showing in March; they slipped 1.5% to a seasonally adjusted annual rate of 662,000. However, the new-home market remains healthy. The number of new single-family homes on the market fell from March but is still 12.4% higher than a year ago. It would take 5.4 months to sell through that inventory at today’s sales pace, marking the fifth consecutive month that the inventory-to-sales ratio was over five months. Sales of homes not yet started were the strongest in five months, indicating housing starts are still climbing. Home builders say there is strong demand for new homes across all price ranges and in most major markets.

Existing-home sales declined in April but were close to the cycle high they reached in November. After rising in February and March, existing-home sales dipped 2.5% in April to a seasonally adjusted rate of 5.46 million. Sales have been moving sideways because of supply-side issues. Inventories have increased slightly since January and continued that trend in April, rising 9.8% over March. The supply of homes on the market, however, is very small relative to sales. Inventories were down 6.3% in April from a year ago — the 35th consecutive month of year-over-year declines. With that relatively paltry stock, it would take four months at today’s pace to sell through. Properties were on the market for an average of 26 days in April, down from 29 days a year ago.

Prices kept climbing in March. The S&P CoreLogic Case-Shiller National Home Price Index rose 6.5% in March from a year ago, up slightly after a 6.4% year-over-year gain in February. The moderate sales pace in relation to somewhat scant housing stock is fostering fierce competition for properties and driving up prices across the nation. Western markets are experiencing the largest gains. Seattle was home to the greatest annual price increase at 13%, followed by Las Vegas’s 12.4% and San Francisco’s 11.3%.

See Also: A Housing Shortage Looms as Builders Can't Keep Up