Economist Offers Positive Housing Market Forecast for Second Half of 2015

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The real estate market is currently one of the bright spots in the U.S. economy, and this will likely continue into the second half of 2015. Low mortgage rates and job growth will bring more home buyers into the market, causing an uptick in mortgage loan originations. This is the latest housing market forecast offered by the chief economist for Freddie Mac.

Sean Becketti, who recently took over as Freddie Mac’s top economist, issued his mostly positive real estate market forecast earlier today, in the latest “Executive Perspectives” report on the economy.

A Strong Start to the Year

According to the report, the U.S. housing market experienced significant gains in 2014 and into the first half of 2015. By the end of this year, the number of homes sold in the U.S. could reach the highest point since 2007 (before the housing market collapsed). Another milestone: In May 2015, pending home sales reached the highest volume in over nine years.

Despite these gains, however, Becketti points out that the U.S. housing market has not fully recovered from the damage caused by the foreclosure crisis and economic recession. But it appears to be on the right track at least. That is the gist of his housing market forecast for the rest of 2015.

Housing Market Forecast for the Remainder of 2015

Apparently, it’s a good time to be in the real estate or mortgage business. According to Freddie Mac’s chief economist, the company expects “the economy to post a stronger second half, especially in the housing sector.”

Real growth — the rate that our Gross Domestic Product (GDP) changes from one year to the next — should average just over 3%, according to Becketti. The nation’s jobless rate, meanwhile, will likely decline even further over the next six months as more Americans find work. Wage increases, which have been disappointing up to this point, are expected to accelerate in the second half of 2015 and into next year.

Becketti offered a positive forecast for the U.S. housing market, as well. His team feels that low mortgage rates will continue to bring home buyers into the market. Tight supply and strong demand should increase home prices in most parts of the country through the end of 2015.

Some highlights from this latest real estate market prediction:

  • Freddie Mac expects housing starts (an economic metric that measures the number of homes beginning construction) to increase by 14% in 2015, compared to last year.
  • Mortgage loan originations could rise by 8% over last year, as more home buyers seek financing.
  • Home prices nationwide could rise by more than 4% this year.

Inventory plays a big role in all of this. In many local real estate markets across the country, there just aren’t enough homes listed for sale to meet demand. This is especially true in and around major cities, where new construction is often limited by geographical restraints. San Francisco and Manhattan are two prime examples.

Freddie Mac’s housing forecast also cited mortgage rates as being a key factor in the current strength of the real estate market. Thirty-year mortgage rates stayed below 4% for the first half of the year. They recently rose into 4% territory for the first time since November 2014 (full story). The threat of rising interest rates could create a stronger sense of urgency for home buyers in the second half of this year.

Disclaimer: This story includes forward-looking statements (forecasts and outlook) for the U.S. real estate market in 2015 and beyond. These statements were provided by third parties and do not necessarily reflect the views of the publisher. The Home Buying Institute makes no claims or assertions about future conditions in the U.S. housing market or broader economy. The data included above are deemed reliable but not guaranteed.