Freddie Mac predicts total home sales, housing starts and house prices will continue to rise this year, reaching their highest point since 2006, according to its March Outlook that was released today.
Freddie Mac does not expect inventory and affordability challenges keep the market from reaching its highest level. It also expects the 30-year mortgage to remain below 4% throughout the home buying season, until the second half of the year.
"Housing markets are poised for their best year in a decade,” Freddie Mac Chief Economist Sean Becketti said. “Low mortgage rates, robust job growth and a gradual increase in housing supply will help drive housing markets forward.”
The forecast shows that multifamily and single-family housing starts will increase by 200,000 units to 1.3 million in 2016. Whereas home prices increased by 6% in 2015, the forecast shows that 2016 will increase at a slower rate of 4.8%.
Mortgage originations will also increase, according to the forecast, by $70 billion, bringing the total to $1,650 trillion die to higher expected house prices.
“Low levels of inventory for-sale and for-rent and declining housing affordability will be major challenges, but on balance the nation's housing markets should sustain their momentum from 2015 into 2016 and 2017," Becketti said.