According to Alcynna Lloyd’s recent article in HousingWire, Freddie Mac made several key predictions relating to the nation’s housing starts, mortgage market, labor market, GDP growth, and home prices. Most importantly, Lloyd reported that Freddie Mac predicted that lower mortgage rates “…will decelerate the growth of total home sales in 2019.”
In the above order, Freddie Mac predicted that housing starts would fall well below long-term demand. Freddie anticipates housing starts to be in the neighborhood of 1.29M units in 2019 and 1.36M units in 2020. Comparatively, current housing starts are relative to housing starts during the 1990’s whereas the US population in 1995 was approximately 266.5M and today’s population is approximately 329M.
Sam Khater, chief economist with Freddie Mac, anticipates “…single-family mortgage originations to increase +2.6% to $1.69T in 2019 and remain the same for 2020.” Khater said that with the easing of mortgage rates since the end of 2018, Freddie “…revised (its) forecast of the refinance share of originations to…27% and 24% in 2019 and 2020 respectively.”
For the remainder of 2019 and into 2020, Freddie Mac anticipates single-family mortgage originations to hit +2.1% equating to $1.68T.
Freddie Mac predicted that employment will fall slightly to 3.6% in 2019 but will then pop back up to a “more sustainable, long-term 3.9%” in 2020. Side by side, Freddie forecast that GDP growth would fall to 2.5% in 2019 and then to 1.8% in 2020.
Lastly noted in Lloyd’s article, Freddie Mac’s Home Price Index fell -0.7% in Q4 2018 BUT that the GSE expects home prices to increase +4.1% in 2019 and +2.8% in 2020.