Happy Thanksgiving to the US housing market

CIO Global Blog

05 Dec 2019

On 26 November 2019, the Federal Housing Finance Agency (FHFA), the conservator for Fannie Mae and Freddie Mac, announced that is was raising the limit in most of the US for conforming mortgages from USD 484,350 to USD 510,400. For those regions where the median home price is in excess of 115% of baseline the new conforming limits, the maximum conforming loan limit will be increased to USD 765,600, or 150% of the baseline loan limit.

This represents the fourth annual increase in conforming loan limits since 2016 when the maximum limit for a majority of the US was USD 417,000. The current level of USD 510,400 is 22.4% higher than 2016's level and a welcome relief to US home buyers who have seen the median US home price increase 18.9% since 2016.

We continue to believe that the US housing market is poised for modest gains in terms of both price increases and new housing starts in 2020, particularly for more affordable homes in those markets experiencing population inflows and job creation and in those states that have attractive business, tax and regulatory policies.

Author:

Jonathan Woloshin, CFA, Real Estate & Lodging Analyst Americas, UBS Financial Services Inc. (UBS FS)

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