Realtor.com Releases 2017 Housing Forecast

Looking ahead for 2017, Realtor.com is predicting a 3.9 percent increase in home prices—down from this year’s estimated 4.9 percent—and a 1.9 percent increase in existing home sales, to 5.46 million homes. New home sales are expected to grow 10 percent, while new home starts are expected to increase three percent. Interest rates will see upward movement, reaching a 4.5 percent level, while the homeownership rate will stabilize at 63.5 percent.

Realtor.com is also predicting that Millennials will make up 33 percent of home buyers next year, with Baby Boomers accounting for 30 percent. Midwestern cities including Madison, Wis., Columbus, Ohio, Omaha, Neb., Des Moines and Minneapolis will be particularly attractive to Millennials, thanks to their strong affordability levels.

As for the incoming president, Realtor.com Chief Economist Jonathan Smoke does not forecast any significant resonance between a new Chief Executive and the housing marketplace.

“We don’t expect the outcome of the election to have a direct impact on the health of the housing market or economy as we close out 2016,” he said. “However, the 40 basis points increase in rates in the days following the election has caused us to increase our interest rate prediction for next year. With more than 95 percent of first-time homebuyers dependent on financing their home purchase, and a majority of first-time buyers reporting one or more financial challenges, the uptick we’ve already seen may price some first-timers out of the market.”