According to Freddie Mac’s July forecast, home sales will be dampened this year due to a shortage of inventory and rising prices.
Existing home sales in 2019 probably will total 5.34 million, matching the number in 2018. New-home sales probably will grow to 650,000, compared with 620,000 last year, the mortgage financier said.
There likely will be 1.26 million housing starts, including single-family and multifamily, in 2019 compared with 1.25 million last year, the group said in the forecast. Next year, that number probably will grow to 1.34 million, Freddie Mac said.
Mortgage rates are expected to stay low. The 30-year fixed-rate mortgage probably will average at 4.1% in 2019, then decrease to 4% in 2020, Freddie Mac said. Last year, the rate averaged 4.6%.
The refinance share of origination volume probably will rise to 34% from 30% last year, according to the forecast. Total origination volume, including refis and purchase loans, likely will be $1.8 trillion, up from $1.6 trillion in 2018, Freddie Mac said.
The house price appreciation forecast is expected to average 3.4% for 2019, down from 4.8% last year, Freddie Mac said.
Trade tensions and the waning effects of last year’s fiscal stimulus should put downward pressure on growth, the mortgage company said. GDP growth this year probably will be 2.1% compared with 3% in 2018, according to the forecast.
“We expect to see stronger housing starts and increased home sales for the remainder of the year as homebuyers benefit from very attractive mortgage rates, lower prices at the gas pump, plus a gradual bump up in wages," Freddie Mac Chief Economist Sam Khater said. "While this affordability boost is welcomed, rising demand in the face of limited homes for-sale is likely to put even more upward pressure on house prices.”