It is likely going to be a challenging year for home buyers in 2019. But the year ahead should bring some welcome developments, too. Here are five housing and mortgage trends to watch for in 2019.
Wanted: More homes for sale
Real estate has seen more would-be buyers than homes for sale for six years, sliding the balance of power in sellers' direction. It will remain a sellers' market in 2019. But the forecast contains some hope: The number of homes for sale has been rising of late, and that's expected to continue. The problem is that the pent-up demand is still expected to continue to exceed supply, even with more homes for sale.
Home prices will keep going up
Home prices are predicted to keep rising. The good news is that most forecasters believe prices won't rise as fast in 2019 as they did in 2018. The National Association of Realtors predicts a 2.5 percent increase, about half the 2018 increase. CoreLogic and Realtor.com surveys agree. Fannie Mae, meanwhile, is an outlier, predicting a 4.7 percent rise.
Mortgage rates will continue rising
From the beginning of 2018 to mid-December, 30-year fixed mortgage rates went up a little less than three-quarters of a percentage point, to around 4.75 percent. Forecasters expect mortgage rates to rise again in 2019 — but at a slower pace. Forecasts range from a 0.1 percentage point rise predicted by Fannie Mae to 0.5 percentage point forecast by Freddie Mac.
Affordability still a concern
Danielle Hale at Realtor.com said many markets are reaching the point where a typical home price is bumping up against affordability limits. She believes prices will eventually slow their increases to fall back in line with incomes. In 2019, she expects to see big sales increases in more-affordable areas such as El Paso, Texas; Tulsa, Okla.; and Chattanooga, Tenn.
New homes get smaller
According to the U.S. Census Bureau, the median size of single-family homes started in the third quarter of 2018 was 2,320 square feet. That's 4.9 percent smaller than three years earlier. At $309,700, the median price of a new home in October was 3.1 percent lower than the median new-home price 12 months earlier.