New Home SalesCENSUS
614K
U.S. Housing Market · 2018
U.S. Housing Market in 2018
Existing SalesNAR
5.34M
Median PriceNAR
$261,600
30Y MortgagePMMS
4.54%
In 2018, the U.S. housing market recorded existing-home sales averaged 5.34 million, new-construction sales of 614K, and a 30-year fixed mortgage rate of 4.54%.
Existing-home sales fell 3.1% from 2017. the median existing-home price rose 5.1% to $261,600. the 30-year fixed mortgage rose 0.55 percentage points to 4.54%.
By the numbers — 2018: new-home sales 614K, existing-home sales 5.34M, median existing price $261,600, 30-year mortgage rate 4.54%.
Macroeconomic Context
The Federal Reserve executed four rate hikes in 2018, the most in a single year since 2005, pushing the federal funds rate to a range of 2.25 to 2.50 percent by December. GDP growth accelerated to approximately 3.0 percent — buoyed by the fiscal stimulus from the 2017 tax cuts and increased government spending — and unemployment fell to 3.7 percent, the lowest in nearly 50 years. Consumer price inflation averaged roughly 2.4 percent. The combination of strong growth, tight labor markets, and gradually rising rates created an environment of self-confident tightening that would prove short-lived.
The Trump administration imposed tariffs on approximately $250 billion of Chinese goods, triggering retaliatory measures from Beijing in a trade war that disrupted supply chains, raised costs for manufacturers, and added a layer of uncertainty to business investment decisions. Financial markets absorbed the tension — the S&P 500 fell roughly 20 percent from its September peak to the December trough before recovering — and the Fed's December rate hike, coming as markets were plunging, contributed to sharp criticism from the White House and financial markets alike.
For housing, 2018 was the year affordability became the defining constraint. Mortgage rates rose from roughly 4.0 to 4.9 percent over the course of the year. Median home prices had risen more than 30 percent since 2013. The combination — rising rates on top of already-elevated prices — pushed monthly payments beyond comfortable reach for many first-time buyers. Existing-home sales fell on a year-over-year basis for most of the second half, and pending home sales indices pointed to further deceleration heading into 2019.