Freddie Mac tempers housing economy outlook
Home construction dips after sharp rebound
Housing construction sustained positive momentum over the summer, but Freddie Mac predicts only moderate fourth-quarter growth, as homebuilders struggle through uncertain economic times.
The enteprise released its October 2013 U.S. Economic and Housing Market Outlook Tuesday. The report suggests the government shutdown combined with a lackluster economy and falling home construction levels may weaken or slow the overall housing market.
In fact, many analysts are cautiously optimistic with employment numbers showing very little promise in September, and the government still facing another debt ceiling debate.
The good news: Housing has already staged a comeback. Lingering Census Bureau data from the summer-selling season proves just how far home construction has come from recessionary levels.
As HousingWire reported during the summer, homebuilders grew more confident in June, as the National Association of Home Builder’s index measuring builder confidence reached its highest level in four years during the month.
Overall, $340 million was spent on private residential construction in August 2013, up 1.2% from $336 million in July 2013, and an 18.7% increase from $287 million in August 2012, the Census Bureau said.
"The housing recovery keeps chugging along despite a constant barrage of disruptions to the broader economy," explained Frank Nothaft, Freddie Mac's vice president and chief economist. And despite fears of a slowdown, he's optimistic overall.
"We're likely going to see the housing recovery slow down, but not shut down, as we close out the rest of this year due to tight inventories in many markets, rising mortgage rates and slumping consumer confidence."
Admittedly, new home construction has a few odds against it, Freddie Mac suggested. For starters, the economy is expected to add less than one million housing units in 2013, and only 1.15 million units in 2014. While these figures are solid, they're well below normal market levels, Freddie Mac said.
However, David Crowe, chief economist for the NAHB, still predicts modest construction growth in 2014 and 2015. Crowe's numbers fall in line with Freddie's, with NAHB predicting 924,000 new housing units in fiscal 2013, up 18% from last year.
"We are finalizing all of the curing that needed to take place to get households and the housing industry back to normal," Crowe added. "Households have fixed their balance sheets and builders are attempting to garner all of the needed resources."
Freddie's overall outlook is that housing can absorb more economic shocks heading into 2014, while still growing at a modest pace.