A year ago, several experts predicted the new tax law would cause a slowdown in the housing market. So far, the limitations on mortgage-interest and property-tax deductions haven’t had a negative impact. Instead, rising interest rates and home prices are doing more to put a damper on the market. Economic uncertainty brought on by global trade tensions, stock market volatility, and the government shutdown also isn’t helping. In this environment, potential homebuyers can be reluctant to make a large purchase such as a house. The last sustained government shutdown in 2013 saw a slump in home sales. It is too soon to tell whether the recent decline is a temporary lull or a major pullback. In their forecasts for 2019, real estate experts anticipate the housing market slowing down, but not stalling, with prices and interest rates moderating. “If rates trend sideways next year, as we anticipate, and home price appreciation continues to moderate, improving affordability should breathe some life into the housing market,” said Doug G. Duncan, chief economist at Fannie Mae.
The National Association of Realtors expects home sales to flatten and home prices to continue to increase, though at a slower pace. “The forecast for home sales will be very boring — meaning stable,” said Lawrence Yun, NAR chief economist. NAR expects sales to increase 1 percent to about 5.4 million and the median home price to rise 3.1 percent to around $266,800 in 2019, and $274,000 in 2020. Redfin sees the housing market cooling in the first half of the year. Price growth will settle around 3 percent after reliably exceeding 5 percent since the start of 2015. “There’s quite a bit of uncertainty around our price forecast,” said Daryl Fairweather, Redfin chief economist. “There’s a real chance prices could fall below 2018 level, putting up negative growth for the first time since 2011.” According to Zillow, rising rates are encouraging homeowners to stay put and discouraging would-be buyers. “Rising rates will set the scene for the housing market in 2019,” said Aaron Terrazas, senior economist at Zillow. “They will affect everyone, driving up costs for home buyers and creating more demand for rentals. Even current homeowners could start to feel locked into their rates.”