Home prices were consistently up again in most markets in 2018 but at reduced levels compared to recent years. High demand for few homes for sale fueled price increases, but evidence is mounting that inventory will finally improve in 2019. This may apply some downward pressure on prices for beleaguered home buyers. A fourth interest rate hike by the Federal Reserve in 2018 spooked the stock market to close out the year. The Fed has indicated that the number of rate increases in 2019 will be halved, which may be of little comfort to an already compressed consumer.
Closed Sales decreased 17.2 percent for existing homes and 21.1 percent for new homes. Pending Sales decreased 4.1 percent for existing homes and 39.3 percent for new homes. Inventory decreased 4.7 percent for existing homes but increased 6.1 percent for new homes. The Median Sales Price was up 5.7 percent to $185,000 for existing homes and 15.9 percent to $387,903 for new homes. Days on Market decreased 2.0 percent for existing homes and 2.7 percent for new homes. Supply decreased 5.3 percent for existing homes but increased 3.4 percent for new homes.
Unemployment rates remained remarkably low again in 2018, and wages continued to improve for many U.S. households. It is generally good for all parties involved in real estate transactions when wages grow, but the percentage of increase, on average, has not kept pace with home price increases. This created an affordability crux in the second half of 2018. Housing affordability will remain an important storyline in 2019.
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*Information provided courtesy of KCRAR and Heartland MLS