According to Freddie Mac’s July Forecast, an overall increase in home sales for the remainder of the year will be dampened by the ongoing shortage of homes for sale and rising house prices.
Freddie Mac Chief Economist Sam Khater outlined some predictions he sees on the horizon for homebuyers.
“We expect to see stronger housing starts and increased home sales for the remainder of the year as homebuyers benefit from very attractive mortgage rates, lower prices at the gas pump, plus a gradual bump up in wages,” Khater said in the release. “While this affordability boost is welcomed, rising demand in the face of limited homes for-sale is likely to put even more upward pressure on house prices.”
For the full year 2019, Freddie expects GDP growth of 2.1 percent as trade tensions and the waning effects of last year’s fiscal stimulus put downward pressure on growth. The forecast calls for mortgage rates to follow Treasury yields, with the 30-year fixed-rate mortgage averaging 4.1 percent in 2019, before decreasing modestly to 4.0 percent in 2020.
The house price appreciation forecast is expected to average 3.4 percent for 2019 while the housing starts forecast will remain unchanged. Expect to see an increase to 1.26 million and 1.34 million new homes in 2019 and 2020, respectively, Freddie stated.
Given the combination of increased homebuyer demand and housing supply shortage, the forecast called for home sales to be 6.00 million in 2019, before reaching its 2017 levels in 2020 at 6.12 million. With continued low mortgage rates, refinance origination volume is expected to rise above 30 percent in 2019 and lower mortgage rates will translate into higher annual mortgage origination levels of $1.8 trillion and $1.7 trillion in 2019 and 2020, respectively.