Tax reform is moving forward. Lawmakers are currently reconciling the Senate and House versions. The GOP is trying to get it done before 2018. The Fed raised policy rates at this week’s meeting, as expected. The rate increase actually helps to keep mortgage rates low for the near term. The Fed is expected to raise rates 3 times in 2018, based on current forecasts. The policy rate increases could pressure mortgage rates higher for next year.
Homebuilders that focus on entry-level housing are expected to flourish in 2018. A growing economy, solid job market, and low mortgage rates are driving demand. In its 2018 forecast, Realtor.com predicts home prices will go up 3.2% and sales will increase 2.5%. Inventory is also expected to rise. Mortgage rates remain low, and mortgage applications remain high. New purchase apps were 10% higher than a year ago this time.