2016 Home sales to be best since 2006
New home construction and moderate gains in the existing home market will deliver the necessary one-two punch to push total home sales to the highest levels since 2006, according to the 2016 housing forecast issued today by realtor.com®.
Making sense of the story
- The 2016 housing market is expected to be a picture of moderate but solid growth as acceleration in existing home sales and prices both slow to 3 percent year over year due to higher mortgage rates, continuing tight credit standards, and lower affordability.
- The new construction market will see more significant gains in the coming year as new home starts increase 12 percent year over year and new home sales grow 16 percent year over year.
- Total sales for existing and new homes will reach 6 million for the first time since 2006, a result of a strong gross domestic product increase of 2.5 percent and continued job creation.
- These healthy economic indicators will be tempered by lack of access to credit and rising home prices, which will ultimately limit housing demand and growth.
- Chief Economist Jonathan Smoke commented, “Next year's moderate gains in existing prices and sales, versus the accelerated growth we've seen in previous years, indicate that we are entering a normal, but healthy housing market."
- Millennials are expected make up the largest demographic of home buyers in 2016, having represented 30 percent of the existing home market. Driven by increasing income, millennials will seek out homes that meet the needs of their growing families.
- Providence, Rhode Island, is ranked as the hottest market for 2016, with the San Diego region and Sacramento also in the top 10.