According to Freddie Mac’s November Forecast, the biggest unknown about the housing market in 2019 is whether or not current negative trends, such as a lack of housing supply, will persist or if the market will adjust to the shock of higher mortgage rates and resume modest growth.
“Almost all the trends in the U.S. housing market have been negative in recent months as housing market activity continues to adjust to higher mortgage rates,” Freddie Mac Chief Economist Sam Khater said in the report.
“If new-home sales are to resume growth in 2019, builders may have to shift their focus to more modestly priced homes and smaller sized homes to help offset housing affordability concerns. But with cost pressures pinching profitability, this will be a significant challenge,” Khater added.
Some of the Forecast highlights include:
- GDP growth to average 3 percent in 2018 before slowing to 2.4 percent in 2019 and 1.8 percent in 2020;
- Total home sales to decrease 1.6 percent to 6.02 million in 2018 before slowly regaining momentum and increasing 1 percent to 6.08 million in 2019 and 2 percent to 6.20 million in 2020;
- Home prices to increase 5.1 percent in 2018 with the rate of growth moderating to 4.3 percent in 2019 and 2.9 percent in 2020; and
- Single-family mortgage originations to decline 9.9 percent year-over-year to $1.63 trillion in 2018, falling slightly to $1.62 trillion in 2019 and dropping once more to $1.60 trillion in 2020 as a result of shrinking refinance activity.