Dive Brief:
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Freddie Mac this week predicted the U.S. economy will grow 3% and mortgage interest rates will rise to 5% by the end of 2015.
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The agency’s November Economic and Housing Market Outlook forecasts that home sales will “continue strengthening,” even as home prices increase at a slower pace.
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Fannie Mac forecasters also projected total housing starts will increase by 20% in 2015 and home sales will spike by about 5%, which would push sales to their highest level in eight years.
Dive Insight:
Like 2015 forecasts from other housing organizations, Freddie Mac’s stops short of putting housing at the forefront of the economic recovery. “Don’t expect much help from the housing and mortgage industries,” a Freddie Mac press release about the forecast noted.
Instead, job and income growth will continue to pull the economy up, the report said.
Still, the news is good. Even though higher interest rates come with the potential to slow down home sales, Freddie Mac economists indicated they don’t believe that’s what will happen in 2015. Instead, lower unemployment and higher wages will make it easier for consumers to buy homes, which will lead to more construction “and translate into gains for the nation’s housing market,” the report noted.