2020 Housing Market Predictions – by Realtor.com

– Home price growth will flatten, with a forecasted increase of 0.8 percent

– Inventory will remain constrained, especially at the entry-level price segment

– Mortgage rates are likely to bump up to 3.88 percent by the end of the year

– Tight inventory and rising mortgage rates will lead to dropping sales

– Buyers will continue to move to affordability, benefiting mid-sized markets

What will 2020 be like for buyers?

Buying a home in 2020 will offer opportunities for some buyers, as the supply of new homes relieves some of the inventory pressures, and prices moderate. While the inventory of new homes in 2019 remained focused on the high-end, as the luxury market cools, builders signaled their intent to increase offerings in the mid-price segment, a much-needed shift in market dynamics. First-time buyers will continue to struggle with affordability, even with mortgage rates in an approachable range, as entry-level inventory is expected to remain constrained. The broad price moderation will continue to offer opportunities in mid-sized markets in the Midwest and South.

What will 2020 be like for sellers?

Sellers in 2020 will contend with flattening price growth and slowing activity, requiring more patience and a thoughtful approach to pricing. Sellers of homes priced for entry-level buyers can expect the market to remain competitive and prices to stay firm. At the upper end of the price range, however, properties will take longer to sell, and incentives will be needed to close deals. As the market moves toward a more balanced scenario, sellers who adjust to local market conditions can expect to benefit from continuing demand.

Conclusion

Sales of existing homes declined in 2018 and through the first half of 2019, as tightening inventory squeezed first-time buyers. While sales experienced a slight rebound in the third quarter of this year, elevated by declining mortgage rates, the annual pace is likely to be flat at best. Demand for homes remains solid, with younger buyers continuing to vote with their dollars. However, as consumers indicated that they expect a moderation in economic activity in 2020, the housing market is likely to reflect the economic headwinds. Sales of existing homes are expected to decline 1.8 percent in 2020, as the continuing supply shortage and moderating price growth will hamper buyers and tamp down sellers’ expectations.

The decline in sales is projected to be accompanied by a flattening in price growth. With the supply of available homes continuing to balance on a tightrope, and the entry-level demand expected to remain strong, prices are estimated to tick up 0.8 percent in 2020.