It’s a Housing-Market
Not a Bust
Rising interest rates have cooled sales,
but unemployment remains low and the
economy is riding high
All things must pass. For five years now, the housing-market story has been a story
of strong demand and limited supply.
Now, demand has been abated by unrelenting price gains, higher mortgage rates
and a widespread sense that homes have become unaffordable, which is keeping
some would-be homebuyers on the sidelines. Thankfully, for mortgage originators
and the country as a whole, supply remains tight in most areas, so an outright housing bust isn’t expected.
What is the most likely scenario for 2019? What can originators expect? Sales may
decline by 3 to 6 percent, and home-price growth will be slower. National home
prices could still grow 2 to 4 percent next year, so long as the U.S. continues to have
a constrained housing supply and ample job opportunities.
By Ralph DeFranco
Global chief economist
Arch Capital Services Inc.