Economic uncertainty combined with low inventory will likely be the biggest factors that will drive down sales of existing homes in 2020.
Realtor.com, the official website of the National Association of Realtors, in its annual forecast said the U.S. housing market will continue to slow in 2020 because buyers have fewer options and a cooling economy could sway others to rein in spending. Realtor.com expects sales of existing homes nationally to fall 1.8% to 5.23 million when compared to 2019.
The local picture isn’t much better. Realtor.com’s look at nation’s 100 largest metropolitan markets, including the Chicago-Naperville-Elgin, Ill.-Ind.-Wis. metropolitan statistical area, forecasts 2020 sales to drop 0.9% and sale prices to fall 0.3% from 2019. The Chicago MSA includes Lake, Porter, Japer and Newton counties in Indiana and parts of southern Wisconsin.
George Ratiu, senior economist at Realtor.com, said despite a softening market, housing remains a solid foundation for the U.S. economy going into 2020.
“Although economic output is expected to soften – influenced by clouds of uncertainty in the global outlook, business investment and trade – real estate fundamentals remain entangled in a lattice of continuing demand, tight supply and disciplined financial underwriting,” Ratiu said. “Accordingly, 2020 will prove to be the most challenging year for buyers not because of what they can afford but rather what they can find.”
Realtor.com isn’t suggesting a recession is looming but believes there are signs the economy is softening. Business spending is slowing, which often leads to consumers pulling back.
The soft national real estate picture is seen in Northwest Indiana. Across Jasper, Lake, La Porte, Newton, Porter, Pulaski and Starke counties, the area covered by the Greater Northwest Indiana Association of Realtors, sales of existing homes between January and October totaled 8,955, down 2.8% when compared to 9,212 through the same period last year, according to data provided by the Indiana Association of Realtors.
Realtor.com also forecast sale prices in the Chicago MSA would fall in 2020. In Northwest Indiana, home sale prices have remained strong throughout 2019.
The median sale price for homes year-to-date through October in Northwest Indiana was $176,000, up 6.7% from $165,000 a year ago. The average sale price in Northwest Indiana was $198,954, up 4.4% from $190,579 last year.
Northwest Indiana sellers received 95.8% of their asking price year-to-date, up 0.3% from 95.5% through the same period a year ago.
In October, sales of existing homes in Northwest Indiana totaled 972, down 3.1% from 1,003 in October 2018.