Photo: Robert Clark
This year is predicted to end on a “cheerful” note for both the US economy and the housing market.
And what’s more, 2018 is poised to be a very good year for the housing market, according to the December 2017 Economic and Housing Outlook released yesterday by Fannie Mae.
The government-backed mortgage lender increased its 2017 economic growth forecast to 2.5 percent due to better than expected gross domestic product (GDP) growth recorded in the third quarter.
GDP is the best indicator of a country’s economic performance. It measures the value of all goods and services produced within a country over time.
Over the current quarter, consumer demand and investment spending growth are expected to record gains, and business equipment investment in particular is growing at its fastest pace in three years.
“Domestic demand is building momentum, job growth is solid and broad-based, and consumer spending looks likely to strengthen,” Fannie Mae Chief Economist Doug Duncan says in the report.
The impact of the wide-sweeping GOP tax reform bill is still a variable, but Duncan feels it will be positive for GDP growth in 2018.
Meantime, the housing market continues to trend upwards this quarter, says Duncan. However, the market continues to struggle to find the balance between strong demand and inventory shortages, as well as increasing affordability concerns.
Housing starts — also a good indicator of economic strength — are expected to rise 2.5 annually in 2018. Single-family home starts are anticipated to grow almost 8 percent year-over-year in 2018, according to Fannie Mae.
The predicted annual rate of growth for single-family construction is below the 9.4 percent recorded last year. Growth has been lagging behind demand and a strong factor in rising home prices.
Fannie Mae predicts single-family home sales will go up over 13 percent annually in 2018, well above the 10.7 percent annual rate of growth recorded this year.
Click here to read the entire report.