The National Association of Realtors (NAR) used the occasion of a summit headed by Secretary of Housing and Urban Development Ben Carson to release its forecast for housing and the economy over the next year. The predictions were consensus estimates from 14 leading economists who participated in the summit and were surveyed last week prior to the Wednesday meeting.
The forecast was presented by NAR Chief Economist Lawrence Yun during a conference call, but the sound quality of the transmission was extremely poor. In the cause of accuracy, the predictions below are from a very brief press release NAR distributed prior to the call. The release did not cover all of the details which Yun presented.
Yun said the most important question being asked about next year is whether there will be a recession. The economists participating in the summit, which included representatives of several state Realtor groups, the Mortgage Bankers Association, several university and think tank real estate centers, the National Association of Home Builders, the Urban Institute and the American Bankers Association, put the probability of that happening at 29 percent.
The economists said they expect the economy will continue to expand, but at a more modest rate. The projection for the Gross Domestic Product (GDP) next year is 2.0 percent, dipping to 1.9 percent in 2021. Unemployment, currently at a 50-year low of 3.5 percent is expected to rise to 3.7 percent in 2020 and 3.9 percent in 2021 as job creation slows.
Sixty-nine percent of the participating economists expect that the Federal Open Market Committee will hold the federal funds rate where it is while 31 percent expect further cuts next year. Interest rates are also expected to be stable with a projected rate for the 30-year fixed-rate mortgage of 3.8 percent and 4.0 percent in 2020 and 2021, respectively. Home prices will rise at a moderate rate, 3.6 percent and 3.5 percent over the next two years and rents to grow by 3.8 and 3.6 percent. The consensus of the economists was for an increase in commercial real estate prices of 3.6 percent and 3.4 percent.
"Real estate is on firm ground with little chance of price declines," Yun said. "However, in order for the market to be healthier, more supply is needed to assure home prices as well as rents do not consistently outgrow income gains."