Limited housing supply remains the top obstacle to sales growth
The combination of supply shortage and homebuyer demand of US homes will hold back the overall increase in home sales for the rest of the year, according to Freddie Mac.
Freddie Mac forecasted that home sales would hit 6 million in 2019, before reaching it 2017 levels in 2020 at 6.12 million. However, Freddie Mac Chief Economist Sam Khater said that increasing demand with limited inventory would dampen the growth.
The historically low mortgage rates will also bounce back from its downward trend, with the 30-year fixed-rate mortgage averaging 4.1% this year, before moderating to 4% in 2020.
Given the continued low rates, Freddie Mac expects refinance origination volume to soar above 30% in 2019 and annual mortgage originations to rise to $1.8 trillion in 2019 and $1.7 trillion in 2020.
The GSE also anticipates rising demand amid supply shortage to drive house price appreciation up to an average 3.4% for the remainder of the year. Meanwhile, its housing starts forecast stayed the same at 1.26 million and 1.34 million new homes in 2019 and 2020, respectively.
“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,” 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.”
