BENGALURU - The rise in U.S. home prices will continue to outpace consumer inflation until at least 2022, albeit at a slower pace than forecast three months ago, despite a majority of analysts polled by Reuters predicting an improvement in activity in the coming year.
The Nov. 4-18 poll of over 40 analysts predicted U.S. house prices will end 2019 with a 3.0% rise - the lowest in seven years - and then slow to 2.9% and 2.8% over the next two years, a downgrade from 3.2% and 3.3% respectively in August’s poll. After outrunning consumer inflation and wages for more than half a decade, growth in house prices has been on a steady decline for about a year and a half.
Existing home sales, which make up for nearly 90% of all homes sold in the U.S., are forecast to average around the current annualized rate of five million units over the coming year, according to the Reuters poll. A major relief to home buyers came this year from falling mortgage rates as the Fed cut the federal funds rate. The 30-year fixed mortgage rate hit a near nine-year high of over 5.0% last November but has since dropped to around 4.0%.While a slim majority of analysts - 17 of 32 - who answered an additional question said further interest rate cuts would go a long way in stimulating U.S. housing market activity and prices significantly, over 45% disagreed.
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Source: Reuters - 🏆 2. / 97 Read more »