Wichita State forecast: Area home sales, construction to rise in 2015

Local housing sales next year should continue to rise modestly, and the Wichita metro area also should see an increase in permits for new home construction, a forecast from Wichita State University’s Center for Real Estate said.

The forecast, to be formally released Tuesday at the Kansas Association of Realtors Annual Convention at the Hyatt Regency Wichita, said area home sales in 2015 should increase 6.9 percent compared to the 9,180 projected home sales this year. That would put 2015 sales at 9,810.

Housing permits should climb 5.3 percent in 2015, from a projected 940 this year to 990 next year.

Gains in permits and sales will be driven by job growth and continued low interest rates, according to the report.

The forecast noted the city’s employment numbers have lagged Kansas and U.S. job growth. And while unemployment has been falling, so has the number of people participating in the labor force.

But Stan Longhofer, the center’s director, said that the area’s labor force is showing signs of slight growth this year. Between the recent growth in the local labor force and steadily declining unemployment rates “coupled with some other feedback I get from different people, employment growth should pick up and be a little stronger next year.”

The forecast also said mortgage rates are expected to remain low through next year. The center cited a Mortgage Bankers Association forecast of the 30-year conventional rate in which the group said it expects that rate to remain below 5.3 percent throughout 2015.

“Even if they go up to … 5.5 or 6 percent, that is a really low rate that is not going to be enough to significantly price people out of the market,” Longhofer said.

On one front – prices – Longhofer doesn’t see a lot of growth in the coming year.

The forecast projects housing price appreciation of 1.3 percent in 2015. So a $142,899 home – the average sales price of an existing house in Wichita in August – would increase to $144,756.

That gain is less than the 2.2 percent increase estimated for the home prices in Kansas next year.

Home sales in Kansas are expected to rise 2.6 percent to 35,650 units in 2015, according to the forecast. New home permits in the state will be 4,275 in 2015, a less than 1 percent decline compared to 4,315 permits forecast in the state by the end of this year, the forecast said.

This is the 12th year the center has provided a forecast for the local housing market.

In October 2012, the center forecast that home sales would increase 4 percent between 2012 and 2013 to 8,370 units. Sales that year actually topped out at 8,994. It also expected housing permits to rise 2 percent in the same period. Housing permits actually increased 27 percent to 995.

“You’d like to be right on,” Longhofer said of the center’s projections in general. He said the dramatic difference in housing permits was largely the effect of homebuyer tax credits that Wichita and cities around it offered in 2013.

“You’d rather undershoot the forecast,” Longhofer added.

This story was originally published September 29, 2014 at 7:10 PM with the headline "Wichita State forecast: Area home sales, construction to rise in 2015."