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'Tough year ahead' for buyers and sellers in US housing market
NEXT year is expected to be a tough environment for both buyers - particularly for entry-level buyers - and sellers in the US, according to a forecast released by Realtor.com.
As mortgage rates creep up to hit 5.5 per cent by the end of 2019, the average home purchase will be 8 per cent more expensive per month than 2018, the report said.
"We don't expect a buyer's market on the horizon within the next five years," said Danielle Hale, the chief economist for Realtor.com.
A separate housing survey released by Fannie Mae also concluded that only one in five Americans think it is a good time to buy a home.
Sellers will see increasing competition adding pressure on prices and may find it will take longer to sell in the coming year.
After 44 months of declines, inventory picked up last month and is expected to continue to rise over the next year, according to Realtor.com.
The increase however, will be in the mid- to higher-end tiers. Realtor.com is predicting double-digit gains in San Jose, Seattle, Boston and Nashville in 2019 - all not at the entry-level.
Mortgage rates will average 5.3 per cent next year and reach 5.5 per cent by the end of 2019. A separate National Association of Realtors forecast expects the 30-year fixed rate mortgage also rising to reach 5.5 per cent in 2020.
David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices said: "One factor contributing to the weaker housing market is the recent increase in mortgage rates" in a separate emailed report. BLOOMBERG