Despite low interest rates, home sales nationally are expected to slow in 2020, as inventory reaches historic lows, and economic uncertainty prompts consumers to curb spending, according to a new study by realtor.com.
Even with these national trends, the realtor.com study expects Greater Worcester home sales volume and prices to remain flat next year. Greater Boston is expected to see volume drop by 2.1% while prices rise 1.2%; the Hartford area will see sales and prices decrease by 3%; and Portland, Maine is on track to see sales decline by 1.4% while prices rise 1.2%.
While national volume is expected to dip, Millennials, the oldest members approaching 40, and most turning 30 next year, will comprise 50% of all U.S. home purchases, the forecast predicted.
Researchers said despite some relief from new construction, moderating home prices, and mortgage interest rates in the low single digits, first-time buyers will continue to struggle with affordability.
Sellers will contend with flattening price growth and slowing activity. These trends will drive existing home sales down 1.8% to 5.23 million.
Highlights of the realtor.com national 2020 forecast include:
- Home prices will flatten, increasing just 0.8% nationwide.
- Inventory shortages will prevail and could reach historic lows, especially the entry-level category.
- Mortgage rates will remain reasonable, averaging 3.85% throughout the year.
- Affordability will remain a key driver for buyers, benefitting mid-sized markets.
- With little incentive to sell, Baby Boomers will continue to hold onto their homes, while Gen X is more likely to upsize, freeing up some entry level inventory.
George Ratiu, senior economist at realtor.com, said while the economic output is expected to soften next year, influenced by uncertainty in the global outlook, business investment and trade, real estate fundamentals remain entangled in a perfect storm of continuing demand, tight supply, and tough financial underwriting.
