The prediction at the end of May from the National Association of Realtors had been that home prices would be falling soon due to an unsustainable gap between prices and wages, with no clear date. With more recent data and a Reuters poll of 45 analysts offering more input, the expectation is that prices will continue to rise for at least another year, and probably two.
This is not to say there isn’t a large gap between prices and wages. The expected growth rate in earnings is 2.8% for this year, less than half the expected price increase of 5.7% according to a composite index of 20 cities. Prices are predicted to further increase by 4.3% in 2019 and 3.6% in 2020. While the rising prices are leading to a decline in demand, there is still the factor of supply, with low supply being a driving factor for high prices. April data showed that inventory had declined for 35 straight months. Of the nearly 40 polled analysts who responded to the question of what would happen to the supply of affordable homes over the next 12 months, about 80% said it would either stay the same or fall. Additionally, interest rates on 30-year mortgages are expected to hit 5% by the end of 2019.