Housing market growth is expected to continue due to favorable market conditions and modest wage growth, according to Freddie Mac.
The positive impact of low mortgage rates, a robust labor market, low unemployment, and accelerating wage growth could push home sales to reach 5.98 million units and exceed 2018 levels, Freddie Mac said in its monthly forecast for May.
“Our outlook for the housing market remains largely unchanged,” said Freddie Mac Chief Economist Sam Khater. “We still expect stronger home sales and housing starts in the coming months due to favorable market conditions and accelerating wage growth.”
Freddie Mac’s housing starts forecast also did not change from January and February’s lowered first-quarter forecast of 1.26 million units.
In addition, the GSE predicted that the 30-year fixed-rate mortgage rate would average 4.3%, falling from 4.5% a year ago.
Meanwhile, the house-price appreciation forecast inched up and was expected to rise 3.6% for 2019.
Lastly, Freddie Mac anticipated the single-family mortgage originations to grow for the rest of the year. The refinance share was expected to climb from 30% of all originations last year to 33% this year, according to the GSE.
“Additionally, our quarterly report on refinance activity shows that few U.S. homeowners are choosing to tap into their largest source of wealth despite having a record $16 trillion in home equity available to them,” Khater said. “Most homeowners remain reluctant to increase their mortgage balance, whereas we continue to see balance increases on auto loans, credit cards, and student loans.”