U.S. home prices are forecast to rise 4.3%, on average, during the 12 months ended March 1, 2019, according to Veros Real Estate Solutions’ quarterly VeroFORECAST report.
That’s a tenth of a percent increase over the forecast made in the fourth quarter of 2017 and more than a half-percent above the forecast made in the first quarter of 2017.
The report covers 985 counties, 342 metropolitan statistical areas (MSAs), and 13,638 ZIP codes or about 82% of the U.S. population.
“Our latest report predicts the overall U.S. residential real estate market will continue to rise, and rise at a slightly higher rate,” says Eric Fox, vice president of statistical and economic modeling at Veros, in a release. “This is the 23rd quarter in a row where this index has forecast appreciation and the 97 percent to three percent, split between appreciating and depreciating metro areas over the next 12 months remains unchanged from the last update, suggesting consistency in nearly every metro market.”
Markets which are forecast to see the strongest growth in home price appreciation over the next 12 months include Seattle-Tacoma-Bellevue, Washington (11.1%); Bellingham, Washington (10.1%); Kennewick-Pasco-Richland, Washington (10.0%); Denver-Aurora-Broomfield, Colorado (9.9%); and Mount Vernon-Anacortes, Washington (9.9%).
“I’m not surprised to see that four of the five fastest appreciating markets are in Washington State,” says Matthew Gardner, an economist with Seattle-based Windermere Real Estate. “Seattle, in particular, continues to be a popular choice for residents coming from more expensive markets in California. In Seattle and the other Washington State metro areas that made this list, the supply of new construction homes is very limited, which puts additional pressure on existing home prices. I don’t expect much to change in 2018; competition for homes will remain strong, resulting in strong sales and rising home prices.”
“The Seattle market remains exceedingly strong due to its extremely low supply of homes, which is at just one month inventory, and a population that grew 22 percent over the last 15 years,” Fox adds. “Its unemployment rate of 4.5 percent is slightly higher than the national rate of 4.1 percent. In Denver, however, where inventory is only slightly better at around 1.4 months, the unemployment rate is an extremely low 2.9 percent amid rapid population growth.”
Markets which are forecast to see depreciation, on average, over the next 12 months include Atlantic City-Hammonton, New Jersey (-2.9%); Joplin, Missouri (-1.4%); Goldsboro, North Carolina (-1.1%); Longview, Texas (-0.8%) and Peoria, Illinois (-0.6%).
“Many of the markets in the bottom five are in very slow growth metros,” Fox says.
“Atlantic City demand remains so low because the population has been declining for decades,” he says. “Unemployment is high at 6.4 percent, a full two-and-a-half percentage points above the national average. Supply is around nine months and continues to rise. Peoria’s sluggish forecast is due to relatively flat population growth over the past decade and an unemployment rate of 4.6 percent.”