Freddie Mac’s latest outlook forecasts moderate growth for the U.S. housing market for the next two years. However, the government-sponsored enterprise also forecasted declining affordability as income growth is not expected to match home appreciation.
“Starting off the year, things are looking pretty good for the U.S. economy and housing markets. Mortgage rates are low, economic growth has accelerated in recent quarters, and housing is coming off its best year in a decade,” Freddie Mac Deputy Chief Economist Len Kiefer said in a release accompanying the outlook.
“Although housing markets have been improving year-after-year for nearly a decade, there's still room for improvement. We forecast moderating growth in U.S. housing market activity through the next two years,” Kiefer added.
Freddie Mac said home sales, housing construction, and home prices are all expected to be modestly higher in 2018. The outlook predicted that while economic growth in 2018 will remain positive, it will not be strong enough to generate income gains that keep pace with home prices.
“However, there are factors worth keeping an eye on in 2018, namely, is another recession on the horizon, how will housing markets respond to declining housing affordability and how will young adults move the housing market ― more are living at home with their parents today than in 2000,” Kiefer said.