Mortgage lenders, we’re almost through the first month of the year. As you dig in to work on reaching your goals for the year, here’s a quick outlook on the housing market to help you on your way. 

Fannie Mae’s Economic and Housing Outlook is projecting slower economic growth in 2019. Fannie’s Economic and Strategic Research Group’s report explained that while 2018’s economic growth was driven primarily by consumer spending, 2019’s growth may be hampered by stock market volatility and the government shutdown (which ended after Fannie published its outlook). 

The ESR group expects the pace of consumer spending to slow to 2.3% in 2019 from 2018’s estimated pace of 2.8%, but the group notes that labor market conditions should remain solid, with solid employment and wage growth offering possible bright spots amid the potential global economic slowdown. 

What does that mean for home buying and mortgages? 

Fannie Mae’s ESR group is predicting that the housing market will find stable ground in this environment as The Federal Reserve is not expected to increase rates as frequently as they did in 2018. 

“Economic growth in 2018 will likely turn out to be the strongest of the current expansion, and inflation remained anchored even as the unemployment rate dipped to multi-decade lows. However, home sales experienced a setback, partly attributable to the most aggressive pace of monetary tightening of the expansion,” said Fannie Mae Chief Economist Doug Duncan.

“The Fed’s continued efforts to unwind expansionary monetary policies implemented during the recession have the potential to add to the headwinds facing the economy. However, we believe that contained price pressures should afford the Fed sufficient latitude to slow or pause rate hikes this year. This will allow the economy to continue growing, albeit at a slower pace, and housing to regain its footing,” Duncan added. 

That being said, where are potential homebuyers looking to buy? A new study from LendingTree ranks the best cities for first-time homebuyers.

LendingTree’s analysis looked at the 50 largest metropolitan areas in the country by their friendliness for first-time homebuyers. The study revealed that Pittsburgh, Cleveland and Oklahoma City are the easiest cities to purchase a home for first-time homebuyers. LendingTree Chief Economist Tendayi Kapfidze noted that the cities consistently ranked highly across all six metrics used in the company’s study.  

Oklahoma City, Cleveland and Memphis have the lowest down payments, according to LendingTree. The average down payment in the three areas is $32,000, a considerably lower amount than the $50,000 average down payment for the top 50 metros overall. 

The cities of Salt Lake City, Oklahoma City and San Antonio had the lowest down payment percentages out of cities surveyed. LendingTree noted that the three areas have an average down payment percent of 14%, which is two points lower than the average of the 50 cities surveyed.

LendingTree explained it looked at several different down payment variables because it identified down payments as the biggest obstacles to homeownership. 

What about which city has the highest share of first-time home buyers that used FHA financing? LendingTree says the cities of Birmingham, Alabama; Detroit; and Columbus, Ohio, had the highest share of FHA borrowers, with nearly 40% of buyers in these cities using FHA financing to secure a mortgage.

“This is not surprising considering that a large portion of buyers in these areas had credit scores below 680,” the report said. 

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