The continued strength of the labor market, along with historically low mortgage rates, will keep positive housing momentum alive in 2020.

The Unemployment Rate is currently at a 50-year low of 3.6% with expectations for the index to push even lower to 3.25% by year’s end, matching lows last seen in 1953.

Freddie Mac recently reported that 30-year fixed rate mortgages are at three-year lows while mortgage activity continues to increase.

Low rates, a solid economy, and a strong labor market have also cut mortgage delinquency rates. The Mortgage Bankers Association recently reported that the mortgage delinquency rate in Q4 2019 fell to its lowest level since the current survey series began in 1979.

In addition, the Census Bureau announced that the U.S. homeownership rate rose to 65.1% at the end of Q4 2019, the highest since the end of 2013.

The Fannie Mae Home Purchase Sentiment Index is near all-time highs reflecting that it is a good time to both buy and sell a home.

Finally, the New York Fed reports that $750B in new mortgages were originated in Q4 2019, more than any quarter since Q4 2005.

Bottom line: jobs buy houses, not low rates. But as we move into 2020, we have both a robust labor market and historically low rates fueling housing.

Forecast for the Week
The upcoming week will focus on a bevy of economic data that will cover a broad array of the U.S. economy including reports on housing, consumer attitudes, manufacturing, economic growth, and consumer spending.

In addition, the Fed’s key measure of inflation, the annual Core PCE, will also be released as it continues to hover at 1.6%, well below the Fed’s target range of 2%.

With earnings season all but over, the financial markets will continue to trade on the coronavirus headlines which will continue to affect investor sentiment.

The current U.S. economy is seeing low rates, tame inflation, a strong job market, and an expanding economy — a true Goldilocks environment.

Reports to watch:

  • Housing numbers will be seen from Tuesday’s S&P Case-Shiller Home Price Index followed by Wednesday’s New Home Sales and Thursday’s Pending Home Sales.
  • Consumer Confidence will be released on Tuesday with Consumer Sentiment on Friday.
  • Durable Orders, Gross Domestic Product, and Weekly Claims will be released on Thursday.
  • On Friday, Personal Income and Spending and Core PCE will be delivered.

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