The economy is booming, take-home pay is rising and millennials are getting married and having children. Despite all those home buying catalysts, this could be one of the weakest spring selling seasons in recent years.
The culprits: rising mortgage rates, a tax bill that reduces the incentives for homeownership and a growing weariness among first-buyers being priced out of the market—all of which are expected to damp demand for homes this year.
The next few months are a critical test of the housing market, as buyers look to get into contract on a home before summer vacations and the new school year. About 40% of the year’s sales take place from March through June, according to the National Association of Realtors.
With sales volumes expected to be lackluster this year, the relentless price increases of the past few years could lose some steam. That could present opportunities for hardy buyers willing to brave rising interest rates, but make it slightly more difficult for sellers in some pricey markets.
“It’s still going to be a tight market, but we’re moving from an extremely tight market to one that has some wiggle room around the edges for buyers,” said Daren Blomquist, a senior vice president at the housing-research firm Attom Data Solutions.
Lawrence Yun, chief economist at the National Association of Realtors, said he expects sales to be flat this spring from a year earlier. Roughly 2.06 million homes were sold between March and June 2017, up from about 2 million in the same period a year earlier, according to the National Association of Realtors.
Mr. Yun predicts sales will remain flat for all of 2018, due to inventory shortages and eroding affordability, as both prices and mortgage rates rise.
(Source: Maison Global)