The National Association of Realtors is projecting an increase in home sales for 2018.
The increase in sales is coming as a result of a stronger economy, an increase in income and the improved job market. Factors that are limiting the increase in home sales are shortages of inventory and higher mortgage rates.
According to past results, existing home sales increased by 3.8% in 2016 and 1.1% in 2017. The number of existing home sales hit 5.5 million in 2017 and are currently projected to finish 2018 with a 1.8% increase to 5.6 million.
According to National Association of Realtors Economist Lawrence Yun, 2019 continues to be a extension of the trends posted in 2016 and 2017. The projected number of existing home sales for 2019 are put at 5.7 million sales.
What is encouraging about this current market is that the increased sales are not coming as a result of easy money, or the lowering of credit criteria for new home buyers. Millennials continue to increase as a percentage of new home buyers and they are expected at some point to represent 40% of all existing home sales. Currently Millennials account for roughly 30% of all existing home sales, but wage increases and better job and employment opportunities are accelerating their climb into home ownership.
The low inventory levels, which have dipped down to a 3.6 months supply, according to the National Association of Realtors, represents a decrease from the 3.8 months supply in 2017.
Another restraint on the inventory is the shortage of skilled labor. Builders of new homes are having to juggle a shortage of skilled workers as well as higher building supply costs.