Freddie Mac released its monthly Outlook for March forecasting that total home sales, housing starts and house prices will reach their highest levels since 2006 despite inventory and affordability challenges.
The Outlook report showed that Freddie Mac expects the 30-year mortgage rate to remain very attractive throughout the spring homebuying season, staying below 4 percent until the second half of the year. It forecasts combined multifamily and single-family housing starts to increase 200,000 units to 1.3 million in 2016 and home prices to continue to rise, but at a moderating pace, with annual house price appreciation slowing to 4.8 percent in 2016.
Finally, it increased the full-year 2016 total mortgage originations forecast by $70 billion to $1.65 billion because of higher expected house prices.
“Housing markets are poised for their best year in a decade,” Freddie Mac Chief Economist Sean Becketti said. “In our latest forecast, total home sales, housing starts, and house prices will reach their highest levels since 2006. Low mortgage rates, robust job growth and a gradual increase in housing supply will help drive housing markets forward. Low levels of inventory for-sale and for-rent and declining housing affordability will be major challenges, but on balance the nation’s housing markets should sustain their momentum from 2015 into 2016 and 2017."
Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets.