Doug Duncan, senior vice president and chief economist with Fannie Mae, believes that housing will be “the engine of growth” for 2020. Duncan said, “Housing appears to be poised to take a leading role in real GDP growth over the forecast horizon for the first time in years. We now expect single-family housing starts and sales of new homes to increase substantially.”

Duncan expects new home sales to increase by +12% in 2020. Such an increase would be the highest level of new home sales since 2007. He also expects new starts to increase to 888,000 units, a 13-year high.

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Duncan said, “We now expect single-family housing starts and sales of new homes to increase substantially (in 2020), aided by a large uptick in new construction as builders work to replenish inventories. Despite the expected increase in the pace of construction, the supply of homes for sale remains tight and strong demand for housing is continuing to drive home prices higher.”

True that new housing starts rose +3.8% overall with multi-family starts increasing +8.6% and single-family starts increasing to +2.8%, according to the Department of Commerce. Additionally, sturdy demand in November drove new home sales to its strongest pace of this economic expansion at a three-month average of 725,667 units. The problem? Sales continue to outpace inventory growth.

Existing home sales increased +4.6% compared to last year at this time but inventory-to-sales ratio mirrored new home supplies. Listings failed to keep up with sales and on a year-to-year basis, total inventory was down -2.5%.

Sam Bullard, managing director and senior economist with Wells Fargo Corporate and Investment, was equally optimistic but not quite as buoyant as Duncan. Bullard said, “Looking ahead into 2020, we expect new homes sales to remain supportive to the overall housing market, aided by low mortgage rates, solid demand, tight inventory in the secondary sales market and a healthy labor market.”

Mirroring both Duncan and Bullard, the National Association of Home Builders reported that confidence levels within its membership are at the highest levels since 1999. US Census Bureau data confirms that confidence by adding that new home sales increased by +1.3% in November 2019, +19.4% higher on an annual basis.

Thanks to HousingWire’s Kathleen Howley, Kiplinger’s Rodrigo Sermeno and MarketWatch’s Jacob Passy for source data.