FREDDIE MAC RELEASES HOUSING OUTLOOK FOR OCTOBER

Freddie Mac recently released its U.S. Economic and Housing Market Outlook for October showing that the federal government shutdown, debt ceiling issues, and the slowing economy — including the severely depressed level of new home construction — are slowing the housing recovery heading into the fourth quarter of the year.
Highlights from the outlook include:
• By the end of the year, Freddie Mac expects mortgage rates to be around the 4.3 percent level, and head higher in 2014.
• Inventories remain tight at a 5 months’ supply as of September due to negative equity, a declining supply of distressed sales, and a severely depressed level of new construction.
• Expect the U.S. economy to add less than 1 million housing units in 2013 and around 1.15 million in 2014, significantly below normal levels.
• Construction employment is 1 to 2 million jobs below trend levels, which is roughly 1 year of non-farm payroll growth at current levels.
• Expect the ramping up of residential construction to take a while, and while economic growth will improve over the next year, the economy won’t be operating at full potential until sometime after 2015.