It’s the start of a new year, and everyone has a spring in their step, especially builders. There seems to be good news left and right about housing starts, buyer activity, and low interest rates that will bolster the once troubled industry. But are the projections that 2020 will be a good year for builders accurate? It really depends on that last item: interest rates. If they stay down, which economists think is likely, then 2020 will be a moderately positive year for construction. If they skyrocket, however, that will throw off the forecasts as the higher rates push some potential homebuyers away and put additional strain on renters.
Economists say that 2020 will be a positive — though not exactly stellar — year for the housing market. And that could be good news for renters and home buyers alike.
But that’s assuming experts’ forecasts are right.
“If interest rates go up 100 basis points, we’ll be off,” Doug Duncan, chief economist at Fannie FNMA, -0.31% said. “When you sign on the bottom line your willingness to be a forecaster, that’s what you’re signing up for.”
If the past year is any indication, predicting the housing market’s trajectory a year or more out can be something of a fool’s errand. At this point in 2018, mortgage rates had just hit their highest level in years and seemed poised to crack the 5% threshold in 2019.