2015 Housing Market Outlook
Freddie Mac – 2015 Housing Market Outlook
Freddie Mac just released its 2015 housing market Outlook.
A few highlights from this report:
Home prices to increase 3.9%. This is an increase from their prior report where they expected a 2015 home price increase of 3 1/2%.
A lower revised average 30 year fixed rate mortgage forecast of 3.9% for the year, versus their prior prediction of 4.2%.
Freddie Mac’s (Freddy Mac) chief economist stated:
“Despite the fact the yield curve has flattened, we remain optimistic about the course of the domestic U.S. economy over the next year. We also do not foresee a major turnaround in the global growth picture and therefore recent trends in foreign buying of long-term U.S. securities activity should continue. That means continued downward pressure on long-term interest rates here in the U.S. Even if the Federal Reserve begins raising short-term rates later this year, don’t expect to see long-term rates — including mortgage rates — increase much. This is great news for housing markets, especially headed into the spring homebuying season. Lower rates help to offset some of the recent increases in house prices and keep homebuyer affordability high.”
Personally, now that the Federal Reserve has ended their six-year long quantitative easing program (devaluation of the purchasing power of the US dollar), it seems likely that later this year the Federal Reserve will hike the short-term federal funds rate. Such a rate hike would immediately affect all mortgage rates. As we all know, any hike in the mortgage rates will slow demand for new and existing home purchases.
Currently, with fuel prices on the rebound, consumer confidence and residential home sales may be very modest in 2015.
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