February 18th, 2016 3:47 PM by Michael Iltis
Mortgage rates are likely to remain near record lows for the first half of 2013, while property values are expected to strengthen, said mortgage-finance company Freddie Mac . The company expects long-term mortgage rates to rise gradually in the second half of 2013, but to remain below 4%, according to its U.S. Economic and Housing Market Outlook. Sister mortgage finance company Fannie Mae said a recent survey showed that Americans are showing increased confidence in the housing market.
Freddie Mac sees house prices continuing to rise next year, with most U.S. house price indexes increasing by 2% to 3%. The company expects household formation to increase households by 1.2 million to 1.25 million in 2013, with housing starts reaching an annualized pace of roughly one million by the fourth quarter.
The new households are likely be formed at a faster pace than new construction, sending vacancy rates for apartments and single-family for-sale homes down to 2002 or 2003 levels.
Freddie Mac said it expects the current refinance boom to continue into the early part of the year, but it said it will be less pronounced than 2012. Single-family mortgage originations are seen declining by 15% while multifamily lending increases around 5%.
“The last few months have brought a spate of favorable news on the U.S. housing market with construction up, more home sales, and home-value growth turning positive,” said Frank Nothaft, chief economist at Freddie Mac.
“This has been a big change from a year ago, when some analysts worried that the looming ‘shadow inventory’ would keep the housing sector mired in an economic depression,” said Mr. Nothaft. “Instead, the housing market is healing, is contributing positively to GDP and is returning to its traditional role of supporting the economic recovery.”