2019 will be a tough year to buy and sell homes across the United States, especially for Millennials. Blame it on rising mortgage rates.
Average home prices across the United States will be 8% more expensive per month in 2019 compared to 2018, said to a new forecast from real estate listings website Realtor.com.
On top of this distressing piece of news, mortgage rates are also expected to rise. Realtor.com said mortgages might hit 5.5 percent by the end of next year.
Mortgage rates should average 5.3 percent in 2019 and reach 5.5 percent by the end of that year. The National Association of Realtors expects the 30-year fixed rate mortgage to reach 5.5 percent in 2020.
Realtor.com doesn't expect a buyer's market on the horizon within the next five years, said Danielle Hale, chief economist for Realtor.com.
A separate housing survey from Fannie Mae estimates only one in five Americans now think it's a good time to buy a home. Experts said one factor contributing to the weaker housing market is the recent increase in mortgage rates, which is bad news, especially for Millennials. Millennials will comprise 45 percent of mortgages in 2019 compared to 17 percent for Baby Boomers
Analysts said rising prices and mortgages might force buyers into downsizing the type of home they're looking for. The discouraging market might knock some would-be buyers out of the market entirely.
Sellers are also expected to see the going get tough. Sellers will see tougher competition and will find it will take longer to sell in 2019.
Realtor.com said that after 44 months of declines, inventory rose in October, and is expected to continue rising over the next year. The increase is expected to be in the mid-to-higher-end tier properties. Surprisingly, high-priced markets will buck the trend and are expected to post double-digit inventory gains. Realtor.com predicts double-digit gains in San Jose, Seattle, Boston and Nashville next year.
But there is a glimmer of good news. For one, home price growth will continue to slow, with a forecast increase of 2.2%. But this slowdown won't be universal. Among the 100 largest markets, only seven are forecast to see home prices drop.
None of the 50 largest metro areas are expected to see double-digit gains, said Realtor.com. On the other hands, 20 metro areas are projected to see home prices rise by 5 percent or more.
