Economic experts have begun weighing in on expected trends in the housing market for next year. Knowing and preparing for changes in the market can help savvy real estate professionals weather any storms that may come. Here are some of the predictions to be on the lookout for:

Increase in Home Purchases. Every industry expert whose opinions we looked at agreed: Purchase mortgage volume will increase in 2018. In fact, Michael Fratantoni, chief economist and senior vice president of research and technology of the Mortgage Bankers Association (MBA), expects purchase growth through 2020. Freddie Mac’s Economic and Housing Research Group (EHRG) has predicted growth of about 2% next year in both new and existing home sales. While refinancing has been strong recently, we’re now seeing a slow shift to a purchase-oriented mortgage market. Which leads us to ...

Decline in Refinancing. EHRG, Realtor Magazine, MBA, Moody’s, and Fannie and Freddie are all looking for refinance activity to decline next year, although CoreLogic is estimating that 250,000 FHA mortgagees could refinance into conventional loans in 2018. This could help borrowers cut monthly payments by canceling FHA annual insurance.

EHRG does predict cash-out refinances to climb to a larger percentage of the refinance market, although EHRG and Realtor Magazine both predict refinances overall will decline to 25% of the mortgage market, the lowest percentage since 1990. Rising interest rates will contribute to the drop in refinancing, according to MBA’s Fratantoni.

Rise in Interest Rates. Speaking of rising interest rates, economists at the MBA predict mortgage interest rates on 30-year fixed-rate loans to rise to 4.6% in 2018, and to more than 5% in 2019. The Federal Housing Finance Agency (FHFA) agrees that rates will hit the mid-4% range next year and mid- to upper 5% range by 2020.

Inventory Issues. Low inventory across the country will continue to remain a challenge for homebuyers in 2018. Experts state that low new housing starts and soaring prices are keeping purchase numbers down. First-time buyers and millennials are the most impacted by the lack of affordable housing. As more homeowners see the difficulties of affording a new home in this climate, they may choose to stay in their current homes longer, which will also impact inventory. Based on a recent survey, Zillow predicts that the shortage of affordable homes will also push housing prices to climb more than 4% in 2018, exacerbating the problem and forcing millennials to remain renters.

"Everyone has been talking about the tight inventory but I think we are OK calling it a straight-up inventory crisis at this point. We just don’t have enough homes." — Svenja Gudell, chief economist at Zillow

The takeaway from all of this is that if you have potential buyers who are on the fence or dragging their feet, these predictions should create a sense of urgency, as their purchasing power will only decrease if the predictions above are true. Let your clients know that buying now, in winter, could be their best choice, before they get priced out of the market.