This past week, Freddie Mac issues its mid-year U.S. Economic and Housing Outlook. Here are the highlights:
- 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 mortgage purchase applications have picked up a bit recently with the traditional home-buying 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.
- Freddie Mac expects 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.
In the accompanying chart, Flagstaff is off the measurement line with 1.48 homes listed per household, so our inventory shortage is not as dramatic as in other parts of the country. Meanwhile we seem to be sharing the country-wide slowdown in home sales.
Market Outlook – Freddie Mac.