Housing inventory could flatline as mortgage rates rise in 2019: SIFMA

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Next year is unlikely to offer relief from higher rates or housing supply shortages, according to the consensus forecast from 24 of the Securities Industry and Financial Markets Association's member firms.

The average 30-year mortgage rate is expected to surpass 5% for the first time in years in 2019 and housing starts are expected to remain unchanged at 1.3 million, 24 economists from SIFMA member companies agreed.

New-home sales could inch up slightly to 700,000 from 600,000 next year, but existing-home sales will likely stay static at 5.4 million.

"The current outlook for 2019 is steady," Michael Feroli, chief U.S. economist at JPMorgan and chairman of SIFMA's 2018 Economic Advisory Roundtable, said in a press release.

Looking back at the past year, it appears that overall mortgage-related securities issuance for 2018 will be slightly lower than in 2017, according to SIFMA.

Total issuance in this category year-to-date is down 0.8%, SIFMA President and CEO Ken Bentsen Jr. told attendees at a recent State of the Industry press briefing by the group. Other types of bond issuance outside the mortgage market have been lower in 2018 as well, he noted.

"We're seeing some settling out in the fixed-income space," he said.

There have been higher levels of private-label residential mortgage-backed securities issuance in the past 12 months, but it still represents a relatively small part of mortgage-related issuance.

In addition to Feroli, participating in the consensus SIFMA forecast were economists from Bank of America Merrill Lynch, Barclays Capital BBVA Compass, BMO Financial Group, Citigroup, Credit Agricole, Credit Suisse, Daiwa Capital Markets America, Deutsche Bank Securities, FTN Financial, Goldman Sachs, Jefferies & Co., Moody's Analytics, Morgan Stanley, Nomura Securities International, Northern Trust, PNC Financial, Raymond James, RBC Capital Markets, Societe Generale, Stifel Financial, UBS and Wells Fargo Securities.

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