Expect economic growth in the 2.5 to 3.0 percent range more than 0.5 percentage points better than is projected for 2013 with the unemployment rate falling below 7 percent perhaps by mid-2014.
Interest rates are expected to rise gradually throughout 2014 with the 30-year fixed-rate mortgage ending the year near 5 percent with affordability still strong in most markets. However rising rates will hinder affordability in high-priced markets.
Projecting housing starts to rise to a 1.15 million pace in 2014 which should help to create around 700000 new jobs and quicken the pace of economic growth.
Gains in home sales will be limited by continuing tight inventory in many markets but anticipate sales to rise about 5 to 6 percent in 2014 from 2013 levels.
Expect home values to continue rising but at a more moderate pace around 5 to 6 percent annualized. And expect multifamily property investments to continue to be relatively attractive as we enter 2014 compared with the first decade of the 2000s based on the Freddie Mac Multifamily Investment Index.
"With the close of 2013 will also come a major transition in the housing finance industry" says Frank Nothaft Freddie Mac vice president and chief economist. "For the first time since 2000 we're going to see the mortgage market dominated by purchase activity as the refinance share drops below 50 percent. And with mortgage rates rising we're also going to see the home-sales gains as well as the impressive house price growth begin to moderate to more sustainable levels."
For more information please visit www.FreddieMac.com.
Reprinted with permission from RISMedia. ©2013. All rights reserved.