U.S. Home Prices to Rise at Double the Pace of Inflation and Wages
Millennials are finally landing better jobs with higher salaries. They are starting to get married and have kids. They are also getting tired of living with their parents.
The market has more than recovered all the losses of the 2008 financial crisis, when home prices crashed by nearly 40 percent.
Analysts say a lack of supply and insufficient home construction levels are holding back activity. The low inventory of single-family homes, which account for roughly 90 percent of sales, will continue this year, according to more than 80 percent of 36 analysts.
“A lack of housing supply, rapidly rising home prices, and now rising mortgage rates will hold back housing market turnover this year,” wrote Scott Anderson, chief economist at Bank of the West.
The S&P/Case Shiller composite index of U.S. home prices is expected to gain 5.6 percent this year and 4.3 percent in 2019. That is well above the prediction for wage growth, which will average 2.8 percent, and consumer inflation, which will be 2.3 percent, according to a separate Reuters poll.
Supply could improve in the coming months as government data indicated in February that single-family home completions are at their highest since June 2008.
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