In their 2020 forecast, most real estate experts expect the housing market to move sideways rather than up or down, supported by strong employment and low mortgage rates, but dragged down by low supply. The problem, they say, will be finding enough housing for buyers.

Baltimore’s street.

With the unemployment rate at its lowest level in 50 years and interest rates well below historical norms, the current housing stock is said to be too low, especially for low-cost properties.  Not enough houses are being built, and homeowners are staying longer, creating a bottleneck.

However, the housing market is in better shape than it was a year ago, when economic uncertainty caused by global trade tensions, stock market volatility and the partial closure of the U.S. government, as well as rising mortgage rates and house prices, had weakened sales. Experts believe that risks to economic growth have diminished recently, as a trade agreement between the United States and China appears to be in place and global growth seems likely to reverse and accelerate in 2020.

Mortgage rates, which appeared poised to exceed 5%, a level not seen since 2011, declined in 2019. The average rate on the most popular mortgage, the 30-year fixed mortgage, has remained below 4% for the past 32 weeks, down from 8.5%at the beginning of 2000. The 30-year fixed mortgage rate is expected to remain below 4 per cent over the next year, rising to 3.8% by the end of 2020, but could rise as inflation and economic activity recovers.

New home sales are expected to reach 750,000, an increase of 11% and the highest level in 13 years. Sales of existing homes will continue to be held back by the lack of supply and will increase slightly to 5.6 million, up 4%. The national median selling price of an existing home is expected to reach $270,400, up 4.3 per cent from 2019.

However, some experts such as Lawrence Yun, chief economist of the NRA, also predict that the increase in housing construction and the resulting growth in supply should curb the rise in housing prices in 2020. As a result, national house prices are expected to stabilize or increase by about 0.8%. However, experts are predicting lower prices in some cities such as Chicago, Dallas, Las Vegas, Miami and San Francisco.

Sources :

• https://www.washingtonpost.com/business/2020/01/06/experts-predict-what-housing-market-will-bring/
• https://www.forbes.com/sites/alyyale/2019/11/15/2020-housing-outlook-expert-predictions-for-mortgage-rates-home-prices-tech-and-more/#343ea4522935
• https://www.realtor.com/research/2020-national-housing-forecast/