Mortgage

4 key housing trends

Freddie Mac sees real estate moving in a positive direction

Key indicators show housing moving in a positive direction, paving the way for an ongoing recovery, the latest Freddie Mac Economic and Housing Market Outlook shows.

"As we start 2014, the housing recovery continues its steady pace. House-price gains will likely moderate from last year's pace but rise about 5 percent in national indexes," said Frank Nothaft, Freddie Mac's vice president and chief economist.

"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," Nothaft added.

Pivotal housing indicators include December’s unemployment rate of 6.7%, which remains stubbornly high.

"It may take another two years until the labor market gets back to full employment," the report stated.

Additionally, the report said that 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%.

There is still room for improvement in payment-to-income ratios, which are only at 60% of the level seen in 1999 suggesting room for continued home price growth.

From 1999-2006, mortgage payments on a hypothetical 30-year, fixed-rate mortgage would have increased by 50% more than income growth.

And when measured against the single-family housing stock, home sales have historically averaged about 6% of the stock at an annual rate. With home sales at a 5.8 million pace in 2014, this rate should rise up to 5.7% for 2014.

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3d rendering of a row of luxury townhouses along a street

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