Housing market activity slowed in 2H18 in response to higher mortgage rates. Existing and new home sales declined, while new construction and home prices slowed down Despite affordability remaining an issue going forward, demographic trends will continue to support housing demand
Home price appreciation will continue to decline, but will remain above inflation in the short to mid-term due to a suboptimal supply of new and existing homes for sale
Tighter financial conditions will balance out some of the regional disparities built up over the last decade
The attractiveness of large coastal knowledge-intensive metro areas will remain, but the lack of affordable housing will drive some residents to smaller metro areas away from the coasts
Demand for apartments in attractive areas will remain strong, driven by the strength of the local economies and lack of affordable ownership options
Mid-size metro areas that can attract young families are likely to benefit from the rebalancing in the housing market in the wake of lower affordability.
This document was prepared by Banco Bilbao Vizcaya Argentaria’s (BBVA) Research Department on behalf of itself and its affiliated companies (each a BBVA Group Company) for distribution in the United States and the rest of the world and is provided for information purposes only. The information, opinions, estimates and forecasts contained herein refer to that specific date and are subject to changes without notice due to market fluctuations. The information, opinions, estimates and forecasts contained in this document have been gathered or obtained from public sources believed to be correct by the Company concerning their accuracy, completeness, and/or correctness. This document is not an offer to sell or a solicitation to acquire or dispose of an interest in securities.