Home sales expected to increase as price growth slows: Freddie
A combination of moderate rises in mortgage rates and dipping growth in home prices are projected to boost existing and new housing sales through 2020, according to Freddie Mac.
Mortgage rates stayed mostly flat through October, averaging around 4.9%. The 30-year fixed-rate is forecasted to end up at 4.5% for all of 2018, then jumping to 5.1% in 2019 and 5.6% in 2020.
On the other hand, the rate of home price growth should decline. It's projected to drop to 5.4% this year from 7.2% in 2017, then fall to 4.6% in 2019 and 2.9% in 2020. These combined factors — especially the big decline in price growth — are expected to push home sales in the next two years.
"The housing market continued to cool off in the fall with slowdowns in home sales, new construction and price growth," Sam Khater, Freddie Mac's chief economist, said in a press release. "While we expect the weakness in housing activity to extend the next few months as the market absorbs the recent uptick in mortgage rates, the combination of strong economic growth and millennials moving toward homeownership should help home sales regain momentum and rise modestly in 2019."
While housing sales are forecasted to inch back to 6.07 million this year from 6.12 million in 2017, projections have them rising 3% in two years, going to 6.18 million in 2019 and 6.25 million in 2020.
A predicted increase in housing starts will bump sales as well. Housing starts are expected to settle in at 1.29 million in 2018 and grow about 5% in 2019 to 1.35 million.