Analysts at Redfin predict price growth will settle around 3 percent in the first half of the new year. (Credit: iStock)
The nationwide housing market cooled in the second half of this year, and that trend is expected to continue in 2019.
Housing inventory will rise and price growth will continue to pull back, according to the latest report from Redfin.
Analysts at the home-buying platform predict price growth will settle around 3 percent in the first half of the new year. But analysts added that there was a “real chance” prices could fall below 2018 levels, into negative growth. That would be a first since 2011.
Home price growth has slowed in 2018 year after years of acceleration that pushed prices to record highs in many parts of the country, including Southern California. While growth will continue in some secondary markets around the country, according to Redfin, primary markets that saw strong growth in the first half of this year will see the most significant slowdown. Those include West Coast markets like Los Angeles, San Francisco and Seattle.
Rising mortgage prices are prompting some potential home buyers to hold off on a major purchase. Redfin predicts that some sellers will have to lower prices to move properties.
Home ownership rates should also rise as speculators and house-flippers back away from the market, creating more room for consumers. Home-flipping is down to its lowest level in more than three years, according to a recent survey.
The nationwide supply of homes is 5 percent higher going into the new year than it was approaching 2018. Homebuilders — whose confidence in the market is at a two-year low — will focus on starter homes as well, according to Redfin.
Higher interest rates will boost the cost of lending for bank and nonbank lenders. Those lenders may in turn expand their customer base to lower-credit buyers, according to Redfin, like first-time buyers and those earning less. Wages could also increase because of continued low unemployment, which could make home ownership more attainable for more Americans.
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