Housing Market to Strengthen in 2017

bti-pic Total housing starts plummeted in November, but they will rebound in coming months. A sharp decline in multifamily starts pushed overall housing production down 18.7% last month, to a seasonally adjusted annual rate of 1.09 million units. Multifamily starts are down 4.1% year to date, while single-family construction is up 9.6%. Despite the recent decline, residential construction remains at a level that shows steady demand for housing. Building permits indicate that further growth is in store for residential construction in early 2017.Inventory is likely to remain low next year, but it could increase by year-end. The total number of existing homes for sale across the nation declined to 1.85 million in November, down 9.3% year over year. The nation’s total housing inventory has dropped on an annual basis for 18 consecutive months. Limited inventory, particularly for lower-priced homes, has made it harder for entry-level buyers to enter the market. The rise in mortgage rates and prices is likely to prompt more homeowners to put their homes on the market, which would lead to an increase in overall inventory later in 2017.Low inventories and modest economic growth should push up price growth next year. The S&P CoreLogic Case-Shiller National Index rose 5.6% in the 12 months ending in October, up from a 5.4% increase the previous month. The hottest markets in the country remain in the Northwest. Seattle, Portland and Denver continue to post strong gains, partly owing to the influx of buyers moving to these tech industry hubs after being priced out of the Silicon Valley area.

New-home sales will likely decline in the next couple of months because of higher mortgage rates. New-home sales increased to a seasonally adjusted annual rate of 592,000 in November. This is 5.2% above the October read more