Freddie Mac is on record stating that it doesn't think that interest rates will rise immensely on 2016, even though the Federal Market Committee's recent announcement that it is raising federal funds rate for the first time since 2006.
Freddie Mac's chief economist, Sean Becketti, said that interest rates should remain at historically low levels, in spite of whatever moves the Federal Reserve is expected to make.
Here are five more housing predictions for 2016:
1. Expect the 30-year fixed-rate mortgage to average below 4.5% for 2016 on an annualized basis.
2. Gradually higher mortgage interest rates will present an affordability challenge, but expect a strengthening labor market and pent-up demand to carry 2015's sales momentum into 2016.
3. Expect house price growth to moderate a bit to 4.4% in 2016, driven in part by the reduction in homebuyer affordability and reduced demand as a result of Fed tightening.
4. Housing activity will grow in 2016 despite monetary tightening. Expect total housing starts to increase 16% year over year and total home sales to increase 3%.
5. White home purchase will increase next year, higher interest rates will reduce the refinance volume pushing overall mortgage origination lower in 2016 than in 2015.
This would be good news for the housing market. If you are planning to sell be prepared with a current market value of your property.
Contract signing in the Midwest and South in February drove pending homes sales to their highest level in nearly 2 years. The National Association of Realtors that it's Pending Home Sales Index rose 3.1% in February over January. The February number is 12% above the level in February 2014.
According to the NAR this is the 6th consecutive month that the index has increased. It has not been this high since June 2013. February is the 10th consecutive month that the index has been above 100 which is considered an average level of activity.
The PHSI is based on the number of contracts executive during the month to purchase existing homes. These contracts are generally reflected as completed sales within 60 days.
According to the NAR's monthly Realtors Confidence Index, the share of first time buyers rose slightly from 28% in January to 29% in February. It was the first increase for this consumer segment since last November.
Several markets remain highly competitive due to supply pressures. Realtors are reporting severe shortages of move in ready properties, and properties in lower price ranges. The return of the first time buyer depends on how quickly inventory shows up on the market.
The NAR forecasts that there will be around 5.25 million existing homes sold in 2015, a 6.4 increase from last year. Home prices are projected to rise about 5.6%.
Pending Home Sales Index is a leading indicator of the spring market. Are you thinking of buying your first home? Or selling and moving to a larger home? Or even down sizing? An appraisal to known the current value of your home is a good place to start.
Some advise for selling your home is to paint all the rooms a neutral color. There are lesser known tips that will help your home to sell faster. Typically the faster your home sells, the more money you will make.
As the saying goes, "You don't get a second chance to make a first impression". Curb appeal. When buyers drive up to you house, you want them to feel that your house is well maintained and cared for. Staging a house to appeal to the maximum amount of buyers, can help it sell faster.
The little things that get people through the front door matter first. If your house numbers and mail box are tired, buy new ones. If your front door is old, buy a new one, or paint it.
Check out what improvements that house flippers are doing. Are homes with updated kitchens selling faster and for more money than homes that do not have updated kitchens? If yes, you do not need to spend $100,000, when $25,000 will do. If they are not selling faster and for more money, then save your money.
When buyers walk through the door, make sure you put your best foot forward. Cleaning and decluttering are improvements that cost little money, but can bring big returns.
Change light and plumbing fixtures, brushed nickel is the most popular. Change old and worn out carpeting.
Clarify any areas that will confuse buyers. If you are using a dining room as an office, return it to a dining room. If you have an odd alcove, put in a desk, to show an alternative use.
Don't do improvements that you have always wanted to do, unless it will bring you a return.
The more buyers that you can get into you home, and the faster it sells. The more money you will make.
Fannie Mae economists are painting a much improved picture of the economy, with encouraging news in business investment, and manufacturing.
Housing however is a different story, it is struggling for traction, according to the company's September report. Activity improved in the third quarter with both single and multiple family housing starts rising in July for the first time in 3 months. The increase was attributed to multi family starts, which accounted for 40% of the starts. Multi family construction is not the strong contributor to the GDP as single family construction is.
Home sales were mixed in July. Existing home sales were strong, rising for the 4th straight month, with pending sales suggesting that sales would continue to rise through the quarter. Contract signing for new home purchases were week moving lower in July. The later is at odds with homebuilder confidence, which rose for the 3rd month in a row.
Home prices rose due in part to limited inventory, and a decline in distressed sales, which represented only 9% of transactions in July, compared to an average of 1/3 of all sales in 2009.
One positive note is that mortgage rates have recently stabilized near 2014 lows. The prediction overall is for the housing market to change little through the end of the year.
Will the housing recovery continue? Will it continue into the second half if 2014? Will it continue through 2015?
The consensus among the expert economists at a panel at the Bipartisan Policy Center Housing Summit, is a resounding YES.
There are some risks to growth. But economists agree that housing is unlikely to slide back into the economic doldrums.
Joathan Smoke, chief economist at Realtor.com believes we are firmly in recovery mode. He stated that all of the data points suggest a better second half of every year. Home price appreciation is much healthier. Life is going to be changing from a demographics perspective. We put a major pause on all of our lives during the Great Recession. We have these waves of baby boomers, the wealthiest generation, even if they elect to stay in place, we should see a substantial increase in home improvement.
Mike Fratantoni, economist for the Mortgage Bankers Association, stated that we are on the edge where we'll see meaningful wage growth for families. The trend of raising rents will drive homeownership. One benefit of owning a home is that no one can raise the rent on you.
Beth Ann Bovino, chief economist of Standard & Poor's, said that certain negative economic conditions are now turning around, as proof that housing can be sustained.
Real wages were negative, we're starting tot see that turn around, We were wondering where the consumers are, and it seems that they have come back to the mall. We'll be looking to see housing starts finally reaching and holding 1.5 million in 2 years.
The bottom line is that the consensus is that the economy will continue to improve, and so will housing, along with the economy.