In the monthly REALTORS® Confidence Index Survey, the National Association of REALTORS® asks members “In the neighborhood or area where you make most of your sales, what are your expectations for residential property prices over the next year?”
Home prices have been on the rise as demand continues to outstrip supply. At the end of August 2017, the inventory of homes for sale stood at 1.88 million homes, which is equivalent to 4.2 months of the current monthly sales pace. Month’s supply has been falling since January 2015, 27 consecutive months now. With falling inventory, home prices have increased. As of August 2017, the median price of existing homes sold was $253,500, surpassing the peak median price of $229,500 in June 2006.
The map below shows the median expected price change of the respondents in the next 12 months at the state level, according to respondents in the August 2017 REALTORS® Confidence Index Survey. REALTOR® respondents expected strong price growth in Washington, Nevada, Utah, and Colorado, of more than five percent in the next 12 months.
Since January 2012, the year which can be considered as a breakout year for the housing market, home prices have increased by 68 percent as of July 2017, a four-fold increase compared to the 15 percent gain in median household income.
Housing starts, although improving, have not kept pace with the 1.5 million estimated demand for units coming from net household formation (about 1.2 million) and units needed to replace obsolete or destroyed homes.
Housing starts need to ramp up even further, especially in Texas and Florida, to replace the housing units damaged or destroyed by hurricanes Harvey and Irma. In Texas alone, the Texas Division of Emergency Management of the Department of Public Safety reported that as of September 19, there were 15,458 destroyed residential properties and 61,667 damaged properties (single-family, mobile, and multi-family).