As 2016 draws to a close, the projections for 2017’s housing market are starting to pour in from industry experts and analysts across the country. Now that more and more reports and predictions are coming through, we’re noticing a common theme: 2017 will continue to be a very tight market.

According to Money magazine, home prices are expected to keep rising, albeit at a slower pace – 3.5% in 2017 vs. 4.5% in 2016 – per Moody’s Analytics projections. So if you’re working with clients who are on the fence about buying a home now (or if you’re considering a purchase yourself), it may be wise to make a move sooner rather than later. This could help you avoid trying to find the perfect home in an increasingly shrinking market and potentially help you avoid paying higher real estate prices that are almost sure to come after the new year.

In 2016, smaller homes have seen significantly sharper price growth than large ones, indicating that starter homes and homes that are well-suited to first time buyers are going fast. Also, urban areas are seeing faster home price appreciation than metro outskirts, challenging the long-held notion that more buyers want to live in the suburbs. Both of these trends are expected to continue into 2017. What’s more, inventory has fell considerably among less expensive homes, so home buyers’ money may not go as far as it did in years past.

Those looking to trade up for a bigger, better home are in the housing market’s sweet spot. The first quarter of 2017 could be a particularly good time to make a move, as homes in this segment are plentiful enough so that their prices aren’t skyrocketing.

Between 2011 and 2016, the average price for a two-bedroom house climbed 59% nationwide, while four-bedroom houses rose a more modest 41%, according to an analysis by Attom Data Solutions. Housing inventory has also risen at the higher end of the market, climbing almost 8% for homes in the $500,000 to $750,000 range.

But, if you’re hoping to cash out and scale back – or if you’re a first time buyer looking for a starter home, be prepared to deal with greater competition and higher prices.

This Week’s Mortgage Rate Summary

Conventional and Government lenders set their trade rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates and loan fees move throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates generally go down. When MBS pricing falls, mortgage pricing typically increases. Tracking these movements is critical in the mortgage lending industry. For more information about today’s most up-to-date rates, please contact our team directly. We are among the few mortgage professionals who have access to live trading screens during market hours.

  • Rates Currently Trending: Lower  – Rates are trending lower this morning due to the MBS market worsening by -13bps.
  • This Week’s Rate Forecast: Neutral  – Multiple domestic economic and political data reports will be released, all with the potential to affect rates; however, most experts believe a December rate hike is imminent. 
  • This Week’s Potential Volatility: High – Mortgage rates should hold the slight improvement today with continued volatility today and the rest of the week. Markets will be keeping a close eye on the domestic data released this week. Continued strength in the economy will put further pressures on mortgage rates.