by Calculated Risk on 12/26/2019 10:50:00 AM

Earlier I posted some questions for next year: Ten Economic Questions for 2020. I'm adding some thoughts, and maybe some predictions for each question.

9) House Prices: It appears house prices - as measured by the national repeat sales index (Case-Shiller, CoreLogic) - will be up around 3.5% in 2019, down from close to 5% YoY in November 2018.  What will happen with house prices in 2020?

The following graph shows the year-over-year change through September 2018 (Prices for October 2019 will be released next week), in the seasonally adjusted Case-Shiller Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).

Click on graph for larger image.

The Composite 10 SA was up 1.6% compared to September 2018, the Composite 20 SA was up 2.1% and the National index SA was up 3.2% year-over-year.  Other house price indexes have indicated similar gains (see table below).

The price increases in 2019 were lower than in 2018, however YoY price growth picked up slightly towards the end of 2019.

Although I mostly use Case-Shiller, I also follow several other price indexes. The following table shows the year-over-year change for several house prices indexes.

Year-over-year Change for Various House Price Indexes
Index	Through	Increase
Case-Shiller Comp 20	Sept-19	2.1%
Case-Shiller National	Sept-19	3.2%
CoreLogic	Oct-18	3.5%
FHFA Purchase Only, Freddie and Fannie	Sept-18	5.1%

Inventories will probably remain at about the same level in 2020, and will probably still be somewhat low historically.

Low inventories, and a decent economy suggests further price increases in 2020.

Last year I wrote:

"[I]t seems likely that price appreciation will slow [in 2019] to the low single digits - maybe around 3%."

That happened in 2019, however now I expect some pickup in price increases from the lower mortgage rates in 2020.

If inventory remains at close to the same level, it seems likely that price appreciation will increase from the 2019 pace to the mid-single digits.

Here are the Ten Economic Questions for 2020 and a few predictions:

• Question #1 for 2020: How much will the economy grow in 2020?
• Question #2 for 2020: Will job creation in 2020 be as strong as in 2019?
• Question #3 for 2020: What will the unemployment rate be in December 2020?
• Question #4 for 2020: Will the overall participation rate start declining in 2020, or will it move more sideways (or slightly up) in 2020?
• Question #5 for 2020: How much will wages increase in 2020?
• Question #6 for 2020: Will the core inflation rate rise in 2020? Will too much inflation be a concern in 2020?
• Question #7 for 2020: Will the Fed cut or raise rates in 2020, and if so, by how much?
• Question #8 for 2020: How much will RI increase in 2020? How about housing starts and new home sales in 2020?
• Question #9 for 2020: What will happen with house prices in 2020?
• Question #10 for 2020: Will housing inventory increase or decrease in 2020?