The housing market is expected to continue its rise in the New Year, according to Freddie Mac’s U.S. Economic and Housing Market Outlook for December.
Continuing to keep home affordability low, mortgage rates will likely remain near their record lows in the first half of 2013, Freddie Mac reports. However, the all-time low rates are expected to start inching up slowly during the second half of the year.
Still, mortgage rates are expected to stay below 4 percent, Freddie Mac reports.
Some other forecasts for the housing market in 2013, according to Freddie Mac’s report:
- Home values are expected to increase 2 to 3 percent next year.
- Household formation is expected to increase to a net 1.20 million to 1.25 million household in 2013. Housing starts are expected to reach near the 1 million annualized pace by the fourth quarter.
- Vacancy rates are expected to drop to 2002 and 2003 levels for apartments and single-family homes for-sale “as household formation outpaces new construction.”
"The last few months have brought a spate of favorable news on the U.S. housing market with construction up, more home sales, and home-value growth turning positive,” says Frank Nothaft, Freddie Mac’s chief economist. “This has been a big change from a year ago, when some analysts worried that the looming ‘shadow inventory’ would keep the housing sector mired in an economic depression. Instead, the housing market is healing, is contributing positively to GDP and is returning to its traditional role of supporting the economic recovery."