NEW ORLEANS — The rate of home price gains, driven by a lack of inventory, is expected to soften in the year ahead as builders shift their emphasis from luxury homes to more middle market and starter house.
Low inventory is still stymieing first-time homebuyers, and issues like sparse savings for down payments, damaged credit scores and student debt loads remain critical for the housing market, top housing economists said at a real estate conference here.
“Renters want to be homeowners, but they just cannot convert,” Lawrence Yun, chief economist for the National Association of Realtors, told the National Association of Real Estate Editors conference.
The expected slowdown in price gains is not the sign of another single family home bubble, and it’s not necessarily a bad thing, economists said.
In metro Atlanta, Svenja Gudell, chief economist for website Zillow, said she expects prices to grow 4.3 percent through the first quarter of 2017, beating her projected U.S. average of 2.7 percent.
Yun said he expects 5.4 million existing home sales this year, about 100,000 more than 2015, with an 8 percent increase in new home sales to 540,000 nationwide. Yun projects home prices growing 4.5 percent this year, compared to 6.8 percent last year.
Areas with strong job and wage growth will continue to lead in price gains, Gudell said. But the market has shifted from being in a pure “recovery mode” to a more normalized post-recession market.
Dallas, Denver, San Francisco, Seattle and Portland are seeing double-digit percentage growth in home prices now, but gains are expected to slow there as well.
Home values across the U.S. are near pre-recession peaks, which has allowed more homeowners to be able to sell their homes without taking a loss. Yet inventory remains relatively low in many markets.
The growth in rents also is expected to moderate nationwide as there are concerns about overbuilding in the apartment sector. But the share of income spent on rent in metro Atlanta and other regions is still historically high.
