Photo credit: Montgomery County Planning Commission
Continuing 2014’s Robust Latter Half Through the Next Year
Freddie Mac’s December 2014 U.S. Economic and Housing Market Outlook, predicted that there will be a 4 percent increase in sales in 2015, the highest since 2007.
2015 home sales are expected to reach up to 5.6 million units and powering much of this jump are millennial buyers and the data-backed realization that rental affordability is decreasing nationwide, while credit is loosening. Although the first half of 2014 was affected by the weaker-than-expected economy and harsh winter, home sales made a strong come back for the second half of 2014, which is expected to last through 2015.
In doing the report, Freddie Mac analyzed the 2014 predictions for five main parameters of the housing market: Home sales activity; mortgage originations, rental market, home values and mortgage interest rates.
Home prices experienced moderate gains in 2014, as were predicted after double-digit increases in 2013. Home value gains grew 4.5 percent in 2014 and are expected to increase by 3 percent for 2015, according to Freddie Mac’s report. 30-year fixed mortgage rates are predicted to average 4.4 percent in 2015 after hovering a little below 4 percent in December 2014 and Freddie Mac and Fannie Mae are now offering 3 percent-down loans, which could add more home-buyers to the dynamics. Rental vacancies also fell to their lowest level in the last year, since 2000.
“The recent drop in oil prices has been an unexpected boon for consumers’ pocketbooks and most businesses,” said Frank Nothaft, Freddie Mac Vice President and Chief Economist. “Economic growth has picked up over the final nine months of 2014 and lower energy costs are expected to support growth of about 3 percent for the U.S. in 2015. Therefore we expect the housing market to continue to strengthen with home sales rising to their best sales pace in eight years, national house price indexes up, and rental markets continuing to display low vacancy rates and the highest level of new apartment completions in 25 years.”
Do you think this year’s gains will continue on well into 2015?