"The 2019 housing market is different than what we predicted in fall 2018, primarily due to an unexpected drop in mortgage rates in January 2019.” - Danielle Hale, Realtor’s chief economist.
Lower mortgage rates are spurring some economists to more positively forecast the housing market.
Economists with Realtor.com are predicting mortgage rates to average at 4.5 percent by year’s end, which is nearly a percentage point down from their original forecast. And as mortgage rates dip, investors can expect to see buyers with increased purchasing power, Realtor reported.
“The 2019 housing market is different than what we predicted in fall 2018, primarily due to an unexpected drop in mortgage rates in January 2019,” said Danielle Hale, Realtor’s chief economist. “We believe 2019 will be characterized by lower, but still increasing, mortgage rates that will buoy home prices and sales by boosting buyers’ purchasing power beyond what we initially projected. This will create a slightly hotter, but still cooling housing market relative to the initial forecast five months ago.”
Home prices are also expected to increase higher than expected, according to Realtor. The company projects 2019 home prices to be 2.9 percent higher than 2018, a 0.7 percent bump over its original forecast.
While projections are eyeing an increase in home prices, their acceleration is slowing compared to recent years. Realtor reported that home prices are now growing at a 3.5 to 4 percent year-over-year pace, which is far slower than the last few years of about 5 to 7 percent growth.
Thanks in part to a continued shortage of homes for sale, existing-home sales are also expected to decrease in 2019 — from 0.7 percent to reach 5.3 million, according to, Lawrence Yun, NAR’s chief economist. In 2020, however, Yun predicts that home sales and prices will both increase by about 3 percent.
The decrease is mostly due to a continued shortage of homes for sale in many markets. Looking ahead to 2020, he forecasts sales figures and prices to both increase by around 3 percent.
Typically the hottest home sales season each year, Spring is expected to see a nice boost from the low mortgage rates buyers can now enjoy.