After correctly predicting that 2016 would bring the greatest number of sales among previously owned homes in a decade, we again feel confident in making a bold projection for the 2017 sales year. Based on the rate of job creation and the ongoing increase in stock values, our current projections indicate an especially strong market for existing homes in the United States. With the current economic climate in mind, we believe the existing homes market is so strong that it is reasonable to expect home sales numbers outpacing the previous year by nearly three percent. According to our most recent calculations, a three percent increase translates to almost 6 million existing homes sales for the 2017 year.
There is already ample evidence supporting this projection. In the month of February, for example, the number of contracts for existing US homes outperformed every previous month going all the way back to the summer of 2010. It is worth noting that this increase might be at least partially attributed to homebuyers recognizing the possibility of an increase in the cost of borrowing combined with continued stability in terms of economic growth.
In spite of a relatively limited supply of existing homes — which is indeed having an impact on overall affordability in certain markets — it is our expectation that the existing homes sales market in the US will experience decade-best performance numbers. The same data analyses we use to identify off-market homes in which cap rates and cash flow rate higher than the national average also revealed that while the Northeast, South, and West experienced about a three to four percent increase in February contract signings, the Midwest enjoyed an increase of almost 12 percent.
Of course, the housing market has long been affected by seasonality, so it may be the case that the warmer-than-average weather we’ve experienced in early 2017 is at least part of the reason buyers have entered the market so aggressively despite it still technically being winter. With the overall supply of existing homes on the market also on the rise due to the early arrival of spring all over the nation, it’s only logical to conclude that, given the current economic conditions, a sharp increase in contract signings would naturally follow.
Due to the continued strength of the US economy — along with an increasingly strong labor market engendering a greater sense of job security nationwide — it is entirely rational to project existing home sales approaching 6 million for 2017, a figure that would improve upon last year’s best-in-a-decade performance. Given the accuracy of our previous projections and our longstanding success working with off-market properties, perhaps it should come as no surprise that so many other economists have drawn similar conclusions and are thus in complete agreement with our economic analysis.