Well, that de-escalated quickly. Just a few days ago everyone was all perky when December existing home sales rose 3.6% from November on the heels of a 16.9% monthly increase in housing starts.
Today, December new home sales came in: 694,000 (annualized), down 0.4% from last month—after a 1.1% monthly decline in November that followed a 2.8% decline in October.
Yahoo Finance called it a “disappointing stumble.” Nasdaq noted that “the drop surprised economists, who had expected new home sales to surge by 1.5% to an annual rate of 730,000.”
Given their recent track record, you might think this would make economists more cautious about making predictions concerning the direction of the housing market.
You would be wrong.
“This year we expect consumer demand to re-establish housing construction as a significant contributor to economic growth,” says Doug Duncan, Fannie Mae’s chief economist. “Strong consumer demand and low mortgage rates…have housing well-positioned for a comeback year in 2020.”
Fannie Mae’s latest forecast is for a 2.1% YoY increase to 1,276,000 housing starts in 2019, followed by 1,360,000 starts in 2020 (+6.6%) and 1,419,000 starts in 2021 (+4.4%). Click here to download Fannie Mae’s detailed forecast (SF and MF starts, sales, prices, mortgage rates) at the Executive Council website (password req’d).
The National Association of Realtors believes new home sales will climb to 750,000 in 2020, “an 11% increase that puts them at a 13-year high,” reported SF Gate. NAR sees existing home sales “rising modestly to 5.6 million, a 4% increase.”
George Ratiu, senior economist at Realtor.com, thinks NAR is smoking dope. The current supply of unsold existing homes is only three months’ worth, half of what it would be in a healthy market. Ratiu believes “the scarcity of homes on the market will drive down existing home sales by 1.8% to 5.23 million” in 2020.
On the other hand, Fox Business thinks “it’s likely to be another banner year in 2020.” Mat Ishbia, CEO of United Wholesale Mortgage, told Fox it’ll be a good year to buy a home because mortgage rates are low. “From a homebuyer perspective, affordability is really great,” he says.
On the other other hand, U.S. News and World Report is convinced “2020 might be the best time to put your house on the market” because new buyers are coming into the market, interest rates are low, homeowners have a lot of equity, and last but not least, “there’s no telling what 2021 holds.”
Which is probably just what economists should have said from the beginning.
