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Economic Forecasts

Price Growth Cools

Kiplinger's latest forecast on housing starts and home sales

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GDP 2.5% growth in '19, down from 2.9% in '18 More »
Jobs Unemployment rate will decline to 3.4% by end '19 More »
Interest rates 10-year T-notes at 3.0% by end ’19 More »
Inflation 2.2% in ’19, up from 1.9% in ’18 More »
Business spending Up 5% in ’19 as global growth slows More »
Energy Crude trading from $55 to $60 per barrel in June More »
Housing 5.35 million existing-home sales in ’19, down 0.4% More »
Retail sales Growing 4% in ’19 (excluding gas and autos) More »
Trade deficit Widening 7%-8% in ’19 More »

New-home sales surged in November amid supply backlogs. After a delay in data releases because of the partial government shutdown, the Census Bureau reported last month that new home sales surged 16.9% in November. Buyers were likely prompted by significant discounts: Over the past year, the median price for a new single-family home has fallen 11.9%. But even with the large increase in sales, they are down 7.7% from a year ago. Many areas still face shortages of skilled workers, and that is slowing down the pace of residential construction. Sales of new homes will remain positive in 2019 but will continue their downward trend as affordability becomes a bigger issue over the year.

Existing-home sales dropped in December, despite slower home-price growth in recent months. Sales of existing homes fell 6.4% from November, to a seasonally adjusted rate of 4.99 million. On a year-to-year basis, sales have dropped for 10 consecutive months. Inventory has started to grow, but still sits close to historical lows. The inventory increases in recent months indicate that more homeowners are putting their places up for sale as price growth is slowing down across the nation. On a year-to-year basis, total inventory was up 6.2% in November. It would take 3.9 months at the current pace to sell through it. Properties stayed on the market on average for 46 days in December, up from 40 days a year ago.

See Also: A Housing Shortage Looms as Builders Can't Keep Up

Home-price growth is decelerating across the nation. The S&P CoreLogic Case-Shiller National Home Price Index rose 5.2% in November from a year ago. The sizable increase in mortgage rates since the start of 2018 has reduced affordability and has slowed the pace of home-value appreciation. Price growth has declined on a year-to-year basis for eight consecutive months. Las Vegas saw the largest annual increase, at 12%, followed by Phoenix at 8.1% and Seattle at 6.3%.

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