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I N D U S T R Y I N S I G H T / T E N D A Y I K A P F I D Z E
Housing has been a bright spot in an economy
gripped by uncertainty in 2019. Economic growth
has slowed meaningfully, and confidence in the
outlook has weakened, leading the Fed to transition
from raising rates in 2018 to cutting rates this year. e business
sector has been a focal point of weaker data as companies try to
navigate the vagaries of the trade war between the United States
and China, and other global trade risks such as Brexit.
is fall of confidence led to declines in the
10-year Treasury interest rate that have been
beneficial to the housing market. Mortgage
rates are more than 100 basis points lower than
in November 2018, increasing homebuying
activity and homebuilder confidence, as well
as creating a refinance boom that may be
the largest in more than a decade. Home-
price increases continue, though at a more
moderate pace—a welcome development given
affordability challenges. Loan performance
continues to make records with low delinquency
and default rates. ese factors have led the
housing market to outperform expectations in
2019 from the previous year.
After exceeding expectations in 2019, the
question everyone is asking is, what's ahead for
the housing market in 2020?
DOWN THE ROAD
As always, the rates picture will play a key
role. After the declines in 2019, it's difficult
(but not impossible) to see rates falling much
further. e lingering uncertainty about the
economy—stemming in large part from the
trade war—could escalate in an election year.
From the Trump administration's perspective, a
trade deal with China could be a useful talking
point for an election campaign. On the other
hand, it may be helpful to have the trade war
as a foil. It will come down to the political
From Fed actions to student debt, an economist
breaks down the factors that could shape 2020.
