Chief economist and vice president of Dodge Data and Analytics Robert Murray recently shed light on expectations for the housing market in 2019, including a drop in the multifamily sector. While presenting the annual Dodge Construction Outlook, Murray suggested that, while the multi-family market witnessed an uptick in 2018 and the single family market has steadily improved over the past 10 years, rising prices and interest rates make for lower starts in both sectors.

Sales among multifamily housing units saw a brief revival in 2018, with unit sales growing 2 percent to 508,000, while vacancy rates held steady at 5 percent. However, that direction is expected to change, with an 8-percent drop forecasted for 2019, landing somewhere around 465,000 units. The drop may be due to rising rental rates, Dodge’s report suggests, along with increasing interest in single family properties.

The report suggests that, while home prices continue to rise, sales among single family homes are up 6-7 percent year over year, rising 5 percent to approximately 842,000 units in 2018. However, researchers at Dodge expect a 3 percent redirection in single family unit sales in 2019, declining to around 815,000 units. Despite that impending dip, however, numbers are expected to remain up from previous years, even with rates increasing to 4.9 percent among 30-year fixed mortgages.

Indications point to affordability issues among new homes, the report suggests, as Millennials find it difficult to buy amid requirements for 20 percent down payments and debt to income ratios that remain weighted by student debt. For this reason, inventory for new homes is on the rise.

Cris deRitis, Dodge’s senior director, economics, and head of consumer research reiterates these findings with new information on housing starts. Following a rise in prices and rates, both single family and multifamily starts remain low, with the current housing supply at 1,310,000 units, and the trend housing demand at 1,750,000 units.

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