Strengthening Economy Expected to Push Home Sales and Prices Up

The Greater Capital Association of REALTORS® leadership traveled to Washington, DC last week to attend the National Association of REALTORS® Legislative meetings and meet with New York elected representatives, Paul Tonko, John Faso, Kirsten Gillibrand and Chuck Schumer on homeownership issues and concerns. Across the nation, markets report overall that a stronger economy, wage growth, and an improving job market are expected to push home sales and prices higher in the second half of 2018 though low supply will continue to hamper the rate of increases.

Locally, the Capital Region’s low inventory continues to create a competitive situation for buyers and pressure on prices which rose by 9 percent to a median sales price of $211,500 in year to year comparisons. Inventory levels market-wide decreased by 21 percent to 4,293 units causing average days on market in April for existing homes to land at 70 and new construction at 79.
GCAR President, Susan Sommers of Better Homes and Gardens Real Estate Tech Valley commented that “Many sellers and builders are in a good position for financial gains, as the local economy continues to favor putting existing homes on the market and building new homes for sale.”

Pending sales increased 9 percent from April 2017 to 1275 for the month. Closed sales decreased by 3 percent from April 2017 to 813 for the month. Months’ supply of inventory was down 24 percent to 4.2 months. As expected due to the inventory shortage, percent of original list price received at Sale rose to 96 percent since 2017.

Lawrence Yun, chief economist of the National Association of Realtors®, presented his 2018 midyear forecast in DC stating that despite headwinds, a moderate and multiyear increase in home sales is likely ahead. “Challenging affordability conditions have prevented a meaningful rise in the homeownership rate after having fallen to a 50-year low a few years ago,” said Yun. “To increase homeownership, more home construction is needed, which could be boosted by delivering regulatory relief to community banks, removing the lumber tariff, re-examining stringent zoning laws and training more workers for the construction industry.”

Mr. Yun said affordability conditions would improve measurably if homebuilders increased their production of homes, especially in the affordable price ranges. He forecasts starts to come in around 1.3 million in 2018 and reach 1.4 million in 2019, but that is barely above year-ago levels and well below demand. According to realtor.com® data, there are 250,000 fewer starter homes, those priced under $200,000, now than in May 2015. Millennials, boomers, and investors may all be going after the same affordable inventory of homes, so competition is great, said Danielle Hale, chief economist at realtor.com®. Laura Burns, GCAR CEO agreed and added, “New construction has increased throughout the Capital Region which will provide some inventory relief, but with a median sale price of $388,955, these homes are too often out of reach for first-time homebuyers. Even those seeking a “move up” home lack the inventory to do so.”