The current housing environment is imbalanced, with a shortage of homes available for sale keeping potential buyers and sellers on the sidelines and driving home prices higher. The West has been particularly hard hit, as construction has been unusually slow to ramp back up. Demand is not the issue. The Fannie Mae Home Purchase Sentiment Index rose to a post-recession high of 88.3 in June.
There have been some signs that this logjam is beginning to break. There has been a slight uptick in the corporate relocation market, with businesses and workers leaving higher costs markets like California, New Jersey and Connecticut for lower costs areas like Texas, Florida, Georgia and the Carolinas. Baby Boomers are also retiring in increasing numbers, boosting demand for homes in retiree-driven markets like Florida, Arizona, Nevada and South Carolina.
All told, Wells Fargo forecasts the Median Home Price of Existing Homes) to increase by 6.0% in 2017 and 5.8% in 2018.