Marking the first-ever Real Estate Forecast Summit at NAR’s Washington, D.C. headquarters, a group of top economists arrived at a consensus 2020 economic and real estate forecast at the National Association of Realtors. According to these economists, the U.S. economy will continue to expand next year, while projecting the rise of real estate prices. The experts also reiterated that a recession remains unlikely.
Predicting a 29 percent probability of a recession in 2020 with forecasted Gross Domestic Product growth of 2.0 percent in 2020 and 1.9 percent in 2021, these economists expect an annual unemployment rate of 3.7 percent next year with a small rise to 3.9 percent in 2021.
About 69 percent of the economists said they expect no change, when asked if the Federal Open Market Committee will change the federal funds rate in 2020. On the other hand, 31 percent of them expected that the committee will lower the rate next year.
The average annual 30-year fixed mortgage rates of 3.8 percent and 4.0 percent are estimated for 2020 and 2021, respectively. Annual median home prices are predicted to surge by 3.6 percent in 2020 and by 3.5 percent in 2021.
NAR’s Chief Economist Lawrence Yun said, “Real estate is on firm ground with little chance of price declines. 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.”
In 2020 and 2021, the apartment rents are expected to rise by 3.8 percent and 3.6 percent. The annual commercial real estate prices will also climb by 3.6 percent in 2020 and 3.4 percent in 2021, as per the economists.
NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, CA said “Residential and commercial real estate investment remains attractive as we approach the start of a new decade. Increased home building can serve as a stimulator for the overall economy, and we strongly encourage more homes to be built as buyer demand remains strong.”
The 2019 NAR Real Estate Forecast Summit consensus forecasts are compiled as averages of the responses of 14 leading economists who participated during the summit. The survey was conducted from December 2-5, 2019. Representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries, The National Association of Realtors is the largest trade association in America.