According to a market forecast released by Realtor.com, they expect to see home price growth flatten and tight inventory combined with rising mortgage rates will lead to dropping sales.
Housing Market Predictions for 2020:
– Home price growth will flatten, with a forecasted increase of 0.8 percent
– Inventory will remain constrained, especially at the entry-level price segment
– Mortgage rates are likely to bump up to 3.88 percent by the end of the year
– Tight inventory and rising mortgage rates will lead to dropping sales
– Buyers will continue to move to affordability, benefiting mid-sized markets
|Housing Indicator||Realtor.com 2020 Forecast|
|Mortgage Rates||Average 3.85% throughout the year, 3.88% by end of year|
|Existing Home Median Sales Price Appreciation||Up 0.8%|
|Existing Home Sales||Down 1.8%|
|Single-Family Home Housing Starts||Up 6%|
The report highlighted how a lack of homes for sale, going on since 2015, will continue and could reach historic lows making it difficult for buyers as Gen X and baby boomers hold onto their homes. It also highlights how single-family home construction is expected to increase by 6%. Meanwhile, mortgage rates are expected to remain reasonable at 3.85%.
The report highlights how affordability matters and while the preference is to live in a big city, for the right price point, they make the decision to go to another city—the influx is expected to happen in Texas, Arizona and Nevada while home buyers are priced out of California.
With regards to millennial’s, the report highlights how they will “mature into buying” and by mid-year, 50% of the mortgages taken out in the country will be by millennial’s who will be in their 30’s
For the full report: click here.