Freddie Mac’s monthly housing outlook for June is forecasting this year’s housing starts and home sales will exceed last year’s.
The outlook emphasized that May was the 80th consecutive month of job gains, and that the nation’s unemployment rate dropped to 4.3 percent.
“After a strong March, the housing market, from housing starts to new and existing home sales, took a hit in April. The recent declines are likely to reverse as low mortgage interest rates and solid job gains boost the housing market,” Freddie Mac Chief Economist Sean Becketti said in a release.
“We expect housing starts and home sales to firm in the coming months and for 2017 to exceed 2016's best-in-a-decade levels,” Becketti added.
Freddie Mac’s outlook noted:
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In April, housing starts fell 2.6 percent and permits for single-family homes also declined. After a strong March, home sales also a took a hit with new home sales falling 11.4 percent and existing home sales falling 2.3 percent in April. These recent declines are likely to reverse as low mortgage interest rates and solid job gains boost the housing market.
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Average mortgage rates have declined more than they have risen in recent weeks. However, they are still almost 50 basis points higher than last year's low. Unless rates fall below 3.5 percent for an extended period, refinance volume will fall short of last year's levels. Expect mortgage origination volumes to decline $370 billion for 2017.
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Strong demand and a short supply of housing in many markets continue to push house prices higher. Expect house price appreciation to be over 5 percent for 2017.