MCLEAN, VA--(Marketwired - Aug 13, 2014) - Freddie Mac (
Outlook Highlights
- After several years of weakness we are starting to see the labor market pick up steam having added 230,000 net new jobs on average for the first seven months of this year.
- The Census Bureau reported that over the past four quarters, net household formations totaled only 458,000, compared with long-term projections by the Joint Center for Housing Studies of 1.2 to 1.3 million per year.
- The number of persons per household has increased by 2.6 percent since 2005, going from 2.69 to 2.76 persons per household. If the persons per household had held steady over that period there would be an additional 3 million households today.
- The monthly mortgage payment-to-rent ratio for the U.S. is near the lowest it has been in more than 35 years. Thus, even with some increase in house prices and interest rates, the ratio will remain relatively low.
- Latest forecast has economic growth averaging 3.3 percent in 2015 and the unemployment rate continuing to gradually decline. In this scenario, household formations should pick up and housing starts are projected to increase 28 percent over 2014's pace to 1.3 million starts in 2015.
Quote
Attributed to Frank Nothaft, Freddie Mac vice president and chief economist.
"We are getting closer to a more normalized economy, and now we are expecting to see housing driven by fundamentals, and in fact, we've already seen this in some markets. The economic growth and labor market gains we saw in the second quarter of this year are projected to continue, strengthening household formations and the housing sector. A recovering housing sector will sustain the rally in homebuilding despite likely increases in long-term interest rates. Increased construction activity will further accelerate the improvement in labor markets and fuel even more household formations and more housing demand. The result is an economy that gradually recovers back towards its potential."
Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four home borrowers and is one of the largest sources of financing for multifamily housing. Additional information is available at FreddieMac.com, Twitter @FreddieMac and Freddie Mac's blog FreddieMac.com/blog.