Real estate marketplace Zillow Group said it expects the home-buying market to continue to slow in 2019, as a continued rise in interest rates hurts affordability, particularly in already expensive markets. Zillow said it expects the 30-year fixed mortgage rate will rise to 5.8% by the end of 2019, compared with an average of 4.8% in the Nov. 21 week, according to Freddie Mac.
The expected rise in mortgage interest rates for 2019 will create a domino effect on every major way that consumers interact with the housing market in 2019, including the affordability of both buying and renting a home, and even the commutes of workers across the country, according to a new forecast for the 2019 housing market authored by Aaron Terrazas, director of economic research at Zillow Research.
Zillow is predicting that home prices will continue to grow, albeit at a slower pace than in years past. The company said it expects home price growth to slow, from a 5.6% rise since January to 3.8% growth in 2019.
Meanwhile, the company said “commutes will worsen as the mismatch grows between job creation in urban cores and millennials settling in the suburbs.”
Separately, Zillow reported that sales of new homes slid in October, explaining that “the steep decline in October new home sales was an unpleasant surprise for a market that was expecting at least a modest rebound from an ugly September.”
- October new home sales fell 8.9 percent from September and 12 percent form a year ago, to 544,000 sales (SAAR), according to the Census Bureau.
- Inventory of new homes for sale rose 4.3 percent from September, the largest monthly gain since September 2013. October inventory was up 17.5 percent from a year ago.
- Sales from the prior three months were revised upward by more than 53,000 units, with the majority of that upward revision coming to September’s initially very disappointing results.