【Freddie Mac】Low Mortgage Rates, Strong Labor Market Fueling Housing Market

As a result, we expect a significant increase in refinance originations in upcoming quarters. Going forward, the combination of low mortgage rates, a tight labor market, and strong consumer confidence will offset declining business sentiment. These factors will set the stage for continued improvement in the housing market heading into the fall.

The lasting impact of trade tensions will have some visible impact on the second half of 2019 and early 2020. Without the short-term effects of tax cuts and fiscal stimulus we saw in 2018, for the full year 2019, we forecast slower growth of 2.2%, and further decelerating to 1.8% in 2020.

The declining trend in gasoline prices as well as wage stagnation lead us to predict that consumer price inflation will remain at 2.4% and 2.3% in the third and fourth quarters of 2019, respectively. Our yearly consumer price forecast remains unchanged at 2.1% in 2019, before edging down to 2.0% in 2020.

Despite fears of an economic slowdown, the U.S. labor market stands firm. Unemployment claims are approaching their lowest levels since the early 1970’s. Job openings also remain higher than unemployment claims for an impressive sixteen consecutive months. There has been little change in workers’ willingness to change jobs, while at the same time, businesses are holding on to their workforce in a tight labor market. This continued strength in the labor market supports our forecast of a strong unemployment rate of 3.7% in the third and fourth quarters of 2019. Our full year 2019 forecast remains at 3.7%, before modestly increasing to 3.8% in 2020.

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