Home sales and new construction cooled off in the fall
Homebuying activity slowed down during the third quarter amid pressures from rising rates and increasing home prices, according to Freddie Mac’s October Forecast.
“The housing market continued to cool off in the fall with slowdowns in home sales, new construction, and price growth,” Freddie Mac Chief Economist Sam Khater said. “While we expect the weakness in housing activity to extend the next few months as the market absorbs the recent uptick in mortgage rates, the combination of strong economic growth and millennials moving toward homeownership should help home sales regain momentum and rise modestly in 2019.”
Freddie Mac noted that mortgage rates remained steady at 4.6% for the third quarter until the weekly average rate reached a seven-year high at 4.9% in the beginning of October. The company expects the 30-year fixed-rate to average 4.5% in 2018, rising to 5.1% in 2019, and 5.6% in 2020.
Home prices are expected to increase to 5.4% in 2018, with the growth rate slowing slightly to 4.6% in 2019 and even further to 2.9% in 2020.
Freddie Mac now forecasts total sales of new and existing homes to decline modestly this year to 6.07 million. Sales are expected to regain momentum to increase 1.8% to 6.18 million in 2019 and rise 1.1% to 6.25 million in 2020.
