News & Opinions
The latest news and insights from Hanley Wood’s outspoken experts and key thought-leaders throughout the residential and commercial design and construction industry.
2013 Housing Forecast: New Home Prices to Rise Strongly This Year
Bradley Hunter / Metrostudy News / April 29, 2013
I had already been calling for strong home price increases in 2013, and the latest evidence in the market suggests that the increases may be even stronger than most are forecasting. I am now expecting price increases in the new home subdivisions of 9.0% in 2013, and in the best “A/B” submarkets, 11%-15%. These are same-project forecasts, not averages. Resale home prices will rise as well, but not quite as fast; homebuilders will be driven by extreme cost pressures, and consumer demand will continue to strengthen this year, allowing builders to pass along the higher costs.
By 2014/2015, however, I believe the pace of escalations will slow down again. There are three independent reasons for this.
1) Resale listings, now extremely low, will start to replenish.The main reason (on top of the recent investor buying spree) that there are fewer listings is that a large number of would-be sellers are holding their units off the market until prices go higher. It would not be surprising to see more homes get listed after another year of rising prices. That increased supply will then start to slow the rate of price increase. Another point: much has been made of the reduced number of listings of resale homes, and many commentators have pronounced based on this that “inventories” are low, but MLS listings do not truly equate to “inventories,” in that most of the homes on the MLS are occupied. Don’t call MLS listings “inventories”; finished-vacant new home supply is a much better leading indicator for home prices.