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Freddie Mac’s Outlook for April Giving ‘Mixed Signals’

Freddie Mac released its U.S. Economic and Housing Market Outlook for April, noting that the housing market continues to be "noisy," giving mixed signals heading into Spring. The government-sponsored enterprise (GSE) did offer some specific market projections for the upcoming buying season.

Freddie Mac projects that new home construction will increase by 18 percent, while home appreciation will moderate to an annual growth of 5 percent for 2014.

The company also commented that due to a slower than normal first two months of the year, they are lowering their home sales projections slightly, from 5.6 million to 5.5 million.

"We're getting mixed signals as we start the spring home buying season. Tight inventory may pose a significant challenge for home buyers in many markets across the country, which may result in higher home prices and sales being lower than expected," said Frank Nothaft, Freddie Mac VP and chief economist.

Nothaft added, "This is good news for those markets that have room to run on the house price appreciation front, but it's also going to increase the affordability pinch in many markets, especially along the country's east and west coasts. Two indicators that are supporting local housing activity are rising consumer confidence and declining unemployment rates."

The housing market is being helped by local employment, which saw all 50 states experience a decline in unemployment rates, according to Freddie Mac. 18 states saw at least a half percentage point reduction in their unemployment rate over the previous three months, ending in February.

Although consumer confidence has waned slightly from an increase in interest rates, Freddie Mac found that confidence is tracking higher, and noted, "March was at the highest level since January 2008."

The company believes that the 30-year fixed-rate mortgage will continue its path of gradual increases, eventually ending the year around 5 percent.

About Author: Colin Robins

Colin Robins is the online editor for DSNews.com. He holds a Bachelor of Arts from Texas A&M University and a Master of Arts from the University of Texas, Dallas. Additionally, he contributes to the MReport, DS News' sister site.
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