Realtor.com Predicts the Top Trends in Housing for 2017

Hologram of a home planted in the soil with an arrow and coins of growing money trend within it.

Realtor.com 2017 Housing Forecast sees a slowing housing market and higher home prices.

2017 is looking like a good year for newly built homes. According to the Realtor.com’s 2017 Housing Forecast released Nov. 30, 2016, new-home sales are expected to grow in 2017 and new home starts are expected to increase 3 percent.

The national real estate market, however, is expected to see slow, but moderate, growth and home prices are expected to increase 3.9 percent. Interest rates will likely reach 4.5 percent.

One question many have is how the presidential election will affect home prices. The forecast doesn’t see any effects from the election. What does change is the number of first-time buyers. According to the forecast, demographics and a stronger economy were set to increase the number of first-time buyers in 2017; however, an expected increase in mortgage rates will likely be a challenge for this segment of potential homebuyers.

“With more than 95 percent of first-time buyers dependent on financing their home purchase, and a majority of first-time buyers reporting one or more financial challenges, the uptick we’ve already seen may price some first-timers out of the market,” Jonathan Smoke, chief economist for realtor.com, said in a news release.

In addition to fewer expected first-time buyers, here’s what the report named as the top five trends we’ll see in 2017:

Dominating the Market


Despite higher interest rates — and despite a lowered Millennial market share due to challenges to first-time buyers in 2017 — Millennials and Boomers are expected to dominate the market, not just next year, but for the next 10 years.

Millennial Hotbeds

Millennials are expected to purchase homes in the Midwest, particularly in Madison, Wis.; Columbus, Ohio; Omaha, Neb.; Des Moines, Iowa; and Minneapolis, where the Millennial market share for these markets is 42 percent, compared to the U.S. average of 38 percent. Why? These markets have strong affordability for Millennials, making the Midwest hot, even as interest rates go higher.

Price Appreciation Will Slow

Of the top 100 largest metros in the country, 46 markets are expected to see a slowdown in price growth of 1 percent of more — Lakeland-Winter Haven, Fla., Durham-Chapel Hill, N.C.,; and Jackson, Miss., will see the biggest slowing in price appreciation. Nationally, home prices will slow to 3.9 percent growth, year over year, according to the forecast.

Fewer Homes

A limited inventory of homes in the top 100 U.S. metros is not expected to change in 2017.

The West Will Lead

Five of the top 10 markets on realtor.com’s 2017 top housing markets based on price and sales gains are in the West: Los Angeles; Sacramento, Calif.; Riverside, Calif.; Tucson, Ariz.; and Portland, Ore. These and other Western metros are likely to see a price increase of 5.8 percent and a sales increase of 4.7 percent, both higher than overall U.S. real estate market.
Patricia L. Garcia is content manager for NewHomeSource and an award-winning journalist. You can find her on Google+.

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