The year has already had its fair share of ups and downs, but a new 2020 housing forecast from realtor.comÂ® says there’s more of that coming. A rebound is in the cards according to the reportâ€”home sales are set to bounce back in late summer and early fall as coronavirus fears begin to subside. Catch-up, however, will prove difficult. Realtor.comÂ® predicts that despite an increase in transactions in Q3, home sales will decrease by 14 percent year-over-year.
The forecast: home prices will flatten, increasing only 1.1 percent in 2020; sellers will stay on the sidelines; inventory will remain scarce; and buyer demand could be volatile.
Here’s the overall outlook:
Existing Home Sales (million)
2020 updated forecast: 4.5
2020 original forecast: 5.25
2019 Actuals: 5.34
Existing Home Sales (YoY)
2020 updated forecast: -15 percent
2020 original forecast: -1.80 percent
2019 Actuals: 0.00 percent
Existing Home Prices
2020 updated forecast: $275K
2020 original forecast: $274K
2019 Actuals: $272K
Existing Home Prices (YoY)
2020 updated forecast: +1.1 percent
2020 original forecast: +0.8% percent
2019 Actuals: +4.9 percent
Single-Family Housing Starts
2020 updated forecast: -11 percent
2020 original forecast: +10 percent
2019 Actuals: +1 percent
30-Year Fixed Mortgage Rate
2020 updated forecast: 3.2 percent
2020 original forecast: 3.5 percent
2019 Actuals: 3.9 percent
The biggest challenge? Inventory. According to the report, buyers will have trouble finding available homesâ€”new homes for sale dropped 45 percent YoY in April. In addition, the buying climate may change, allowing for more “as-is” purchasing but less all-cash competition amidst market shifts due to COVID-19.
With a decrease in competitive buying, sellers can expect fewer multiple offers. With that, days on markets should increase as the pace of sales slows.
A market rebound depends on several key factors, including generational trends, niche markets, and the political and economic climate. Realtor.comÂ® expects Boomers to postpone selling for another year, while millennials continue to push forward as the “dominant buying force”â€”they are predicted to make up 50 percent of home purchases in 2020. Secondary markets could see growth this year, according to the report, especially in areas with “resilient job markets.”
The wild card, according to realtor.comÂ®? The 2020 presidential election, as economic strength is typically a good predictor of voting trends.
“The U.S. housing market started 2020 with substantial momentum. With some of the best home sales and housing starts in more than a decade, our biggest challenge going into the spring home-buying season was a lack of for sale homes. The coronavirus pandemic has kept both buyers and sellers on the sidelines, preserving market balance, for now,” realtor.comÂ® Chief Economist Danielle Hale said. “As cities and states begin the slow process of reopening, we’re going to see a see-saw recovery with ups and downs that will favor the nation’s secondary markets in the short-term.”
Hale added, “The pandemic is leaving an imprint on the fabric of American life, culture and preferences which we could see for years to come. After experiencing life under quarantine, many buyers are searching for affordability and greater space, which is driving demand out of the nation’s largest metros and into surrounding smaller towns.”
As the coronavirus and its impact on the industry unfold, RISMedia is providing resources and updates.Â Get the latest.
Liz Dominguez is RISMedia’s senior online editor. Email her your real estate news ideas atÂ email@example.com.