What’s in store for the U.S. Housing Market in 2020?
With low interest rates, modest inflation, and a solid labor market, there are many reasons to be optimistic about housing this year.
In 2019, a sustained drop in mortgage rates and a strong labor market helped the U.S. housing market to rebound in the last few months of the year and heading into 2020.
So, what do you need to know about the Economy, Housing, and Mortgage Markets this year?
- The economy continues to stand firm: This year, we set a record for the longest period of economic growth in U.S. history. Going into 2020, solid job gains, low interest rates, and lower financial market volatility should lead to favorable economic conditions, which should help boost the housing market.
- The labor market is strong: A low unemployment rate is a good indicator of a strong economy because more people are participating in that economy. Today, we are seeing an unemployment rate near record lows at 3.5%. Additionally, the U.S. labor market is expected to continue chugging along with job gains helping support stronger homebuyer demand.
- Mortgage rates are low: Throughout the first half of 2019, mortgage rates were on the decline, marking the fourth lowest annual average for the 30-year fixed-rate mortgage in Freddie Mac’s weekly survey since 1971. As we head into 2020, mortgage rates are expected to remain low, averaging around 3.8%. With house prices expected to rise moderately, low mortgage rates will help support affordability.
- There is high demand, but limited supply: The 2019 housing market was marked by a rebound in demand and limited supply. In 2020, demand will continue to rise but home sales activity will be constrained by the lack of supply. While low mortgage rates will help support affordability, the lack of inventory will continue to be an affordability headwind the market has to contend with in 2020.
Source: Freddie Mac