Persistent supply and affordability issues still plague the market, however
The housing market is expected to drive economic growth in the first half of 2020, according to a new forecast from Fannie Mae.
The GSE upgraded its 2020 forecast Monday, projecting real GDP growth of 1.9%. The housing market added growth in the third quarter for the first time in more than a year and a half, and Fannie Mae’s Economic and Strategic Research (ESR) Group expected that momentum to carry over into Q4 and the first half of 2020. Consumer spending, the expected easing of trade tensions, and stimulative fiscal policies also drove economic growth.
“AS we forecasted, housing supported the larger economy in the third quarter, and we expect it to continue to play a productive role through the first half of 2020,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “Positive contributions from single-family housing construction, home improvements, and brokers’ fees pushed residential fixed-investment growth to a robust 5.1% annualized pace this past quarter, and we forecast continued but moderating strength as construction activities and home sales growth continue at a slower pace.”
Duncan also projected adjustments in the mortgage space next year.
“With mortgage rates normalizing, we expect a decline in refinance activity in 2020, with the refinance share of originations dropping from a projected 37% in 2019 to 31%,” he said. “Of course, the housing market as a whole remains constrained by the persistent supply and affordability issues, which is particularly unfortunate given the current strength of consumer demand for reasonably priced homes.”
