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REAL ESTATE UPDATE

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FREDDIE MAC FORECASTS HOUSING MARKET STATUS THROUGH 2019

Freddie Mac has released its latest Outlook, breaking down the state of the housing market in April 2018 and examining where things are likely to head over the next few years. The Outlook forecasts continual gradual growth through Q4 2019, so long as construction continues to ramp up to help offset current constraints on available housing inventory.

Freddie's Outlook predicts that mortgage rates will wind up averaging 4.9 percent in Q4 2018 and 5.4 percent in Q4 2019, respectively. Freddie's Outlook bases these predictions on the assumption that housing supply will continue to increase, whereas demand will cool slightly as mortgage rates rise. The Outlook also anticipates that the Fed will continue raising rates in order to combat inflation.

Under these conditions, Freddie Mac anticipates that total home sales will increase from 6.12 million in 2017 to 6.3 million in 2018. For 2019, Freddie predicts total home sales to hit 6.44 million. "New home sales will drive the growth," the Freddie Mac Outlook states. "The existing home sales market will likely remain flat under our baseline forecast. For existing home sales, the effect of stronger income growth and other demand-side factors will be roughly balanced by rising rates. New homes sales will drive growth as housing construction keeps grinding higher."

However, Freddie predicts that, while housing construction will continue increasing, it is unlikely to see much acceleration during those two years. "The existing home sales market has little room for growth with inventories so constrained," the Outlook states. "Our baseline forecast has only modest increases in mortgage rates. As our historical analysis showed, rapid increases in rates typically dampen housing market activity significantly."

If rates for the 30-year fixed-rate mortgage increase above 5.5 percent, Freddie Mac's Outlook predicts a decrease in home sales of around 10 percent relative to their baseline.

To read the full Freddie Mac Outlook for April 2018, click here.


David Wharton, Online Editor at the Five Star Institute, is a graduate of the University of Texas at Arlington, where he received his B.A. in English and minored in Journalism. Wharton has over 15 years of experience in journalism and previously worked at Thomson Reuters, a multinational mass media and information firm, as Associate Content Editor, focusing on producing media content related to tax and accounting principles and government rules and regulations for accounting professionals. Wharton has an extensive and diversified portfolio of freelance material, with published contributions in both online and print media publications. Wharton and his family currently reside in Arlington, Texas.

Original Source: MReport
  





















     
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Shari Noctor 
610-730-8067
Shari@ShariNoctor.com
AB061614L