According to’s 2018 National Housing Forecast, next year could see some relief from the seemingly relentless housing inventory shortage we have been seeing in recent years. The predict a lower decline in the first part of the year to only a 4% nationwide drop below this year in March 2018… a big improvement from our current 12-month average of 16% below last year in the Twin Cities! They also predict an actual year-over-year increase in inventory levels by fall 2018.

Predictions are that at least part of this relief will come from new construction… which unfortunately won’t  kick in until later in the year and in higher priced homes. The other side to this is many of the people buying these higher priced homes will have homes to sell, which would be welcome news to buyers looking for more moderately priced homes.

Predictions are that price appreciation will slow in 2018, which would be in keeping with the laws of supply and demand if inventory starts to rise. Twin Cities median price appreciation for November 2016-October 2017 was 6.3%, compared to 5.5% nationwide. Nationally they predict a 3.2% increase in 2018.

However, price increases for lower priced homes are expected to remain strong… again because of the laws of supply and demand if increased supply is expected in mid-range and higher price ranges. It could be a good year for move-up buyers.

Of course eyes are on proposed tax reforms which could also have an impact on buyers and sellers depending on what is passed and individual circumstances.

Mortgage interest rates are expected average 4.6% throughout the year, reaching 5.0% by the end of the year… which of course also affects buying power but is still well below the historic average of about 8%.

In summary…

  • Home price appreciation is expected to slow in 2018 to a 3.2% nationwide average increase, down from 5.5% in 2017

  • Mortgage rates are expected to average 4.6% throughout the year and reach 5% by year end

  • Low inventory is expected to start to reverse, with a 2.5% growth in home sales

  • A 7% growth in single family home construction and sales is expected nationwide

Sharlene Hensrud – Email – Minneapolis – St. Paul Real Estate Market

RE/MAX Results HomesMSP Team- SharleneJohnAngela – Minneapolis-St. Paul Realtors


About Sharlene Hensrud

I love what I do! Highly insightful, analytical and creative, there is nothing I love more than helping you find the right solution for your real estate transition. My mission is to serve my clients with honesty and integrity, exceeding their expectations in service and support… and to help others by donating a portion of every transaction to Habitat for Humanity.

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