It goes with out saying; the mortgage industry benefits from a strong housing industry. So mortgage industry professionals like to keep an eye on trends that are developing in housing (both new construction and existing home sales). A big part of our business in the mortgage industry is devoted to the purchase market.
Heading into 2020 we have some good things working for the housing industry:
- The economy is doing good; not great but good enough to help more people buy homes
- Unemployment is low
- Wages are up just a bit
- Interest rates are low
- Strong demand for affordable housing
All these factors should help make 2020 a good year for the housing industry.
The Economy, Employment and Wages:
The economy is good and its hard to argue that. Some will say it's great however there are areas of concern and GDP is below 2.00%. The stock market is not great indicator as to how well the economy is doing and one can argue that the rally in Q3 and Q4 was induced by the Federal Reserve with the lowering of rates and expansion of their balance sheet.
Moving forward all eyes will be on the weekly jobless claims reports and the monthly employment reports. If those reports show a healthy job market that will go along way with keeping mortgage rates low. Inside the monthly employment report is wage data and we need to continue to see that grow to enable greater home buyer purchasing power.
Low Rates And Strong Demand:
Heading into 2020 mortgage rates are at great levels. Both 30 year fixed and 15 year fixed rate mortgage rates are near their multi-year lows which makes it easier for more potential home buyers to enter the market. Provided the Mortgage Backed Security market remains stable we should see mortgage rates remain low compared to 2018 levels.
The demand for new housing is strong as builder optimism is high right now. The fact is we don't have enough homes to satisfy the demand so home values could continue to remain elevated as we move further into 2020.