Due to strong August and September housing numbers, Freddie Mac has forecasted that the housing market will maintain its strength well in into fall and early 2020.  Lower mortgage rates continue to be the catalyst in driving this strong housing market.  As anticipated, the Federal Reserve cut rates in September by a quarter point, and forecasts show for another interest rate cut before the end of the year.  Low treasury yields, which help keep mortgage rates subdued, are expected to decrease.  The 10-year yield is expected to average 1.8% in 2020, down from an annual average of 2.1% in 2019.

In addition, housing starts, which represent newly constructed homes, beat consensus estimates in August, increasing 1.36 million units at an annual rate, the highest level since 2007.  This is welcome news because demand and supply for housing are becoming more in-line.  Freddie Mac stated, “Given the combination of increased housing demand and a projected upward tick in housing supply, home sales are expected to rise to 5.98 million in 2019, before reaching 6.03 million in 2020.”

Lastly, Freddie Mac has also indicated that strong data over the last few months indicates home prices will continue to beat estimates in the coming months.  Their estimates indicate that home prices will appreciate 3.4% in 2019, before tapering slightly in 2020 to 2.6%. 

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