U.S. home prices will defy the current economic downturn and ride out the storm, supported by record low mortgage rates and limited supply, according to a Reuters poll that showed housing outpacing consumer price rises this year and next.
FILE PHOTO: Development and construction continues on a large scale housing project of over 600 homes in Oceanside, California, U.S., June 25, 2018. REUTERS/Mike Blake/File Photo
According to the June 9-19 poll of over 40 housing strategists, house prices will rise 3.0% this year and next. Housing demand, highly sensitive to mortgage rates, has steadily declined since last November. But the average 30-year mortgage rate USMG=ECI hit a new low of 3.3% this month, providing an impetus for buyers to lock in cheap borrowing rates.
Apart from weak activity, the main threat to the U.S. housing market is unemployment, which jumped from record lows to record highs within a couple of months. Still, only a few analysts were expecting house prices to fall in 2020, a stark difference from the 2008 crisis, when property values plummeted by more than a third.
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