With the economy expected to slow in the upcoming year, the housing marketâ€”namely prices and salesâ€”is set to stabilize, according to analysts at Fannie Mae.
For 2019, Fannie Mae’s Economic and Strategic Research Group is anticipatingâ€”as have othersâ€”an ease-off in home prices, which have run up unsustainably, by many measures, for months. According to the Case-Shiller Indices, the boom in home prices sputtered over the summer, and continues to lose steam. By the same token, home sales have struggled throughout the year, burdened by costs and the inventory shortage.
Meanwhile, mortgage rates will rise, indirectly influenced by monetary policy, Fannie Mae’s forecast shows. Rates surpassed 4 percent this year, and economists are expecting them to pass the 5 percent threshold in 2019.
If Fannie Mae’s forecast pans out as predicted, homebuyers could beâ€”somewhatâ€”spared, says Doug Duncan, chief economist at Fannie Mae.
“If mortgage rates trend sideways next year, as we anticipate, and home price appreciation continues to moderate, improving affordability should breathe some life into the housing market,” Duncan says. “However, affordability is likely to remain an industry concern, particularly among first-time homebuyers.”
The economy will expand 2.3 percent in 2019, according to the forecastâ€”a drop from the 3.1 percent expected for 2018. By 2020, it will fall further, to 1.6 percent.
“Fading fiscal policy, worsening net exports and moderating business investment all contribute to our projection that GDP growth will begin to slow in 2019,” says Duncan.