01 Jun Freddie Mac Housing Outlook for May 2018
Below are some highlights from Freddie Mac’s May housing report
- Gross Domestic Product (GDP) grew at an annualized rate of 2.3 percent in the first quarter of 2018, down from 2.9 percent in the fourth quarter of 2017
- Consumer spending growth lowest in 5 years
- Economy added jobs for 91 consecutive months
- 3.9% unemployment rate
- Hourly earnings increased 2.6% year over year
- Inflation increase is 2.5%
Mortgage Rates
- Inflation will put upward pressure on interest rates and mortgage rates
- 30 year fixed continued to increase in May, 4.66% by mid month, continued increase expected
- Expected rates of Q4 2018 4.9% and 5.4% in 2019
Housing Demand
- Increasing interest rates have not yet had an adverse affect on demand, good sign reflecting a healthy economy and strong consumer confidence
- Home sales forecasted to increase to 6.32M, an increase if 3% year over year and 6.44M in 2019, 2% year over year increase
Mortgage Originations
- Affordability decreasing with higher borrowing costs
- Signs of strong labor market and pent-up buyer interest shows confidence in demand
- Refinance activity declined $300 billion (32%) from 2016 to 2017, forecasted to decline another $175B (26%)
- High home sales and house prices will increase purchase origination loans by $60B
- Originations expected to decrease 6% in 2018 to $1.75 trillion and $1.74 trillion in 2019
