Four key housing indicators are all moving in the right direction, which bodes well for an ongoing recovery, according to Freddie Mac's U.S. Economic and Housing Market Outlook for January.
Outlooks and first-quarter projections are as follows:
Freddie Mac reports that December's unemployment rate of 6.7% still remains stubbornly high. It predicts that it may take another two years until the labor market gets back to full employment.
Mortgage delinquency rates at 5.88% have been nearly cut in half from their peak, but they are still very high from their long-term normal average of approximately 2%, reports Freddie Mac.
From 1999-2006, mortgage payments on a hypothetical 30-year fixed-rate mortgage would have increased by 50% more than income growth, according to the report. Currently, payment-to-income ratios are only 60% of the level Freddie Mac 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% of the stock at an annual rate. During the housing boom, home sales increased up to about 9% and then plummeted down to around 4%. With home sales at a 5.8 million pace in 2014, this rate should rise up to 5.7% for 2014, predicts Freddie Mac.
‘As we start 2014, the housing recovery continues its steady pace," remarks Frank Nothaft, Freddie Mac's vice president and chief economist. "House-price gains will likely moderate from last year's pace but rise about 5 percent in national indexes. Home sales, as well as other key indicators, continue to trend in the right direction, although in some markets, we are seeing the sales recovery strengthen while many others remain weak.’
The entire outlook report can be found here.