Economic growth is expected to moderate for the rest of the year, but housing is one sector that is expected to post solid gains, according to Fannie Mae’s newly released report from its Economic & Strategic Research Group.
Economists with Freddie Mac also released a report this week revising housing forecasts upward for the remainder of the year. They expect that with tight for-sale inventories home prices will rise 4.5 percent this year, revised up from 4 percent in a prior report.
“The labor market has added 5 million additional jobs, the unemployment rate is significantly lower, and housing markets are generally in much better condition than two years ago,” says Len Kiefer, deputy chief economist at Freddie Mac.
Fannie Mae economists note that mortgage applications for home purchases –a gauge of home sales — have moved up consistently for the past couple of months.
The wild card for the market may be what happens with mortgage rates in the next few months. Low mortgage rates have helped to keep homebuyer affordability high in the first quarter of this year, but housing markets will likely see an increase in interest rates for the remainder of year, Freddie Mac economists note.