The year 2020 has started with a strong job market and low mortgage rates and should stay that way for the remainder of the year. This means the housing market for 2020 will be strong.
Data shows that the housing market is better than it was this time last year. In 2019, fear caused by global trade tensions, stock market volatility and a partial government shutdown caused doubt in the US economy. The average rate for a 30-year fixed mortgage has remained below 4% for the past 32 weeks according to Freddie Mac.
Purchase applications for 2020 will rise over the number of purchase applications recorded for 2019. As far as numbers, there will be a 1.6% increase for mortgages that will amount to just under $1.3 trillion in 2020. According to Bankrate.com, even if the mortgage rates rise “from the sub-4 percent levels of 2019” the HELOC rates would not change if the Federal Reserve will not change the interest rates.
“The benchmark 30-year fixed-rate mortgage will hopscotch back and forth over the 4 percent mark for much of 2020, remaining low enough to facilitate home-buying and providing ample refinancing opportunities on those trips below 4 percent,” said Greg McBride, Bankrate.com’s chief financial analyst.
According to the National Association of Realtors, the year will bring more growth in the housing market. New-home sales are predicted to rise 11% to 750,000 making this a 13-year high. Existing-home sales will rise 4% to 5.6 million with the national median sale price of $270,400 which is a 4.3% increase from 2019. The National Association of Home Builders predicted that new-home sales will rise to approximately 708,000 making it a 2.5% gain from last year’s numbers.
As far as location, the National Association of Realtors predicts 10 markets throughout the country that will outpace the rest of the US market over the next 3 – 5 years. These markets include Ogden, Utah; Las Vegas; Fort Collins, Colo.; Colorado Springs; Dallas/Fort Worth; Columbus, Ohio; Raleigh/Durham/Chapel Hill, N.C.; Charlotte; Charleston, S.C.; and Tampa/St. Petersburg, Fla.
Realtor.com predicts the top markets to include Boise, Idaho; McAllen, Tex.; Tucson; Chattanooga, Tenn.; Columbia, S.C.; Rochester, N.Y.; Colorado Springs; Winston-Salem, N.C.; Charleston, S.C.; and Memphis. Redfin predicts that Charleston and Charlotte will have the highest home price growth.
Homebuilders are excited about what is to come in the industry for 2020. National Association of Home Builders measured the industry sentiment and discovered that builder confidence is at its highest it has been in two decades. NAHB foresees single-family construction (for-sale housing, custom builds and built-for-rent) will be around 920,000 units making a 4% increase from 2019.
“Low resale inventory and generally healthy economic conditions — including the longest economic expansion in American history — have lifted builder sentiment,” wrote NAHB chief economist Robert Dietz in “Eye on Housing,” the organization’s blog.
“Housing appears poised to take a leading role in real GDP growth over the forecast horizon for the first time in years, further bolstering our modest-but-solid growth forecasts through 2021,” said Doug Duncan, Fannie Mae’s chief economist. “In our view, residential fixed investment is likely to benefit from ongoing strength in the labor markets and consumer spending, in addition to the low-interest-rate environment. Risks to growth have lessened of late, as a ’Phase One’ U.S.-China trade deal appears to be in place and global growth seems likely to reverse course and accelerate in 2020.”
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