Freddie Mac June 2014 U.S. Economic and Housing Market Outlook
2014: A Mid-Year Assessment
Article by Freddie Mac | June 18, 2014
MCLEAN, VA–(Marketwired – Jun 18, 2014) – Freddie Mac (OTCQB: FMCC) released today its U.S. Economic and Housing Market Outlook for June providing a mid-year assessment as well as how for-sale inventory and vacancy rates will affect the near-term outlook. The complete June 2014 U.S. Economic and Housing Market Outlook and forecast table are available here.
- Low for-sale inventory will help to sustain house price and rent gains but at the expense of affordability in the short term.
- While the total number of vacant units has decreased by 4.2 percent from the first quarter of 2010 to the first quarter of 2014, the number of vacant units for sale has declined by 24.2 percent (485,000 units).
- Home purchase applications have picked up a bit recently with the traditional homebuying season underway, yet they’re still currently 13 percent below last year. For this reason, we’re lowering our overall homes sales forecast from 5.5 million to 5.4 million.
- We expect fixed rates to rise gradually during the second half of the year in part as a result of the Federal Reserve’s “tapering” of net mortgage-backed securities acquisitions. Expect the 30-year fixed-rate mortgage to gradually rise higher, ending the year around 4.4 percent.
Quote Attributed to Frank Nothaft, Freddie Mac vice president and chief economist.
“We’re nearly half way through the year and single-family housing remains weaker than we projected six months ago, while multifamily appears to be right on track. With vacancy rates moving back in line with historical averages, even falling below historical averages in some markets, and for-sale inventories remaining tight, U.S. home price indexes are likely to continue their above-inflation growth for the remainder of the year, as will rent gains, albeit much slower than in 2013. The important question is how much further will prices and rents have to rise to give incentives for more existing owners to list their property for sale and developers bring more supply to the market. Construction has rebounded over the past two years but is still significantly below the levels one would expect to see given projections of household formations.”
### Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four home borrowers and is one of the largest sources of financing for multifamily housing. Additional information is available at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog. ###
Source: Freddie Mac
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