Continued low mortgage rates, increased house prices and improving consumer confidence are all factors contributing to increased home sales heading into the spring homebuying season, according to Freddie Mac’s March economic and housing outlook.

Compared to 2012, Freddie Mac expects home sales to increase 8% to 10% in 2013. Housing starts are anticipated to increase to 950,000 units for 2013 compared to 780,000 in 2012.

Last year, real estate added $1.5 trillion to balance sheets, while increasing outstanding residential mortgage debt by 0.1% in the fourth quarter of 2012. This indicates that household deleveraging may be coming to a close.

Freddie Mac warns that the unemployment rate in 2013 will average near 7.8% due to sequestration spending reductions. This will make the unemployment rate essentially flat for the year, or possibly .25 percentage points higher than it would have been sans sequestration.

According to Freddie Mac, this should be the healthiest spring homebuying season since 2007.

"History shows us not all economic recoveries are created equal and consumer confidence mirrors this fact. With the spring homebuying season upon us, the recent highs in the stock market are a welcome signal of better times ahead," said Frank Nothaft, vice president and chief economist of Freddie Mac.

"But it will be the gradually declining unemployment rate and steadily improving housing market that will deliver broad-based economic benefits for Americans and, in turn, support the overall recovery," Nothaft added.

Watch the video below to see Nothaft’s full outlook.