Freddie Mac has released its U.S. Economic and Housing Market Outlook for January showing that four of the key housing indicators are all moving in the right direction, which bodes well for an ongoing recovery.
Outlook Highlights and First Quarter Projections
• December’s unemployment rate of 6.7 percent remains stubbornly high. It may take another two years until the labor market gets back to full employment.
• Mortgage delinquency rates at 5.88 percent have been nearly cut in half from their peak, but they are still very high from their long term normal average of approximately 2 percent.
• From 1999 to 2006, mortgage payments on a hypothetical 30-year fixed-rate mortgage would have increased by 50 percent more than income growth. Currently, payment-to-income ratios are only 60 percent of the level we had in 1999 suggesting room for continued house price growth.
• When measured against the single-family housing stock, historically home sales have averaged about 6 percent of the stock at an annual rate. During the housing boom, home sales increased to about 9 percent and then plummeted to around 4 percent. With home sales at a 5.8 million pace in 2014, this rate should rise up to 5.7 percent for 2014