Home prices have a significant effect on state and local budgets. Home price growth is an important driver of growth in local property tax collections. Prices also can affect revenues from major state taxes, particularly the personal income tax and sales tax. In general, higher home prices mean more tax revenues for state and local governments.
Home Price Growth Estimates. Home price growth started slowing in the spring of 2018, declining from almost 9 percent annual growth (current month compared to the same month a year prior) in March 2018 to 5 percent by the end of 2018 and further to 3 percent in March 2019. We anticipate this trend will continue through 2019, with price growth slowing to an annual rate of 2 percent by the end of the year. In 2020, however, we expect a modest rebound in price growth. We discussed our method for forecasting home prices in this prior post.
