Arch MI: Housing market to remain healthy through end of 2018

by Francis Monfort26 Oct 2017
The US housing market should remain healthy through the end of 2018 as broad-based fundamentals continue to be favorable and prices remain near historic norms, according to The Housing and Mortgage Market Review released by Arch Mortgage Insurance.

Arch Mortgage Insurance said there is no housing bubble in sight and no projection of home prices falling.

The probability of home price declines in the 401 largest cities over the next two years averages at 4%, which the company describes as “an unusually low number.” The figure is based on recent housing market indicators, Arch said. The company said the low probability reflects favorable broad-based fundamentals such as a tightening job market, relatively low interest rates, a low number of homes for sale, and an overall housing shortage.

“People waiting for home prices to fall before buying may want to change their strategy, as the overall housing market is expected to stay strong for the foreseeable future,” said Ralph DeFranco, global chief economist for mortgage services of Arch Capital Services. “Our research shows no housing bubble is forming in the United States, with prices overall near historic norms compared to incomes.”

Additionally, the company said that recent fears about home prices reaching all-time highs are overblown. National home prices, adjusted for inflation, are still 10% below their peak. Arch Mortgage Insurance said that in spite of the average figure, housing crash recovery is varied. Prices in Colorado, Idaho, North Dakota, and the Pacific Northwest have increased, while price growth has been slower in New England and energy-extraction states like Alaska, West Virginia, and Wyoming.

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