PrintFREDDIEJul_2011_public_outlook.pdf
Freddie Mac’s economists are sticking with a prediction of positive sales growth this year despite the abysmal June jobs report.
In its July outlook, Freddie projects new and existing home sales will end up at 4.89 million units this year, up from 4.63 million last year, when the tax credit bolstered sales and sucked them forward in time so that the market tanked after it ended. Overall, Freddie is calling for a 3 to 5 percent increase in sales over last year.
After clear weakness in national price metrics through the first quarter, the FHFA Purchase-Only House Price Index for the U.S. was up 0.8 percent in April compared with March, and the S&P/Case-Shiller 20-city composite index registered a monthly gain of 0.7 percent (not seasonally adjusted) in April, the first positive monthly sign in eight months,” the outlook said.
But even after putting a happy face on the latest price numbers, Freddie still is predicting its price index will fall 2.2 percent this year and Case-Shiller will drop 4.3 percent. Last year Freddie’s index fell 6.2 percent and Case-Shiller fell 3.8 percent.
The “sluggish” June job update likely reflects a temporary “soft patch” in the economy rather than foreshadowing an inflection point in gross domestic product (GDP) growth,” said Freddie’s economists, who concluded that “Buffeted by a recovering rental sector, housing will likely follow the performance of the overall economy for the remainder of 2011,” noting that the unemployment rate ticked up for the third consecutive month to 9.2 percent, the highest in six months.
“Following June’s labor market report, households are naturally concerned about their financial future, which is being reflected in the housing market. Yet, the single-family market will likely improve over the balance of 2011, in keeping with positive GDP forecasts for the United States. Home sales are expected to be up over 2010’s pace, perhaps by 3 to 5 percent. And after clear weakness in national price metrics through the first quarter, there are glimmers the second quarter will likely show gradual improvement over time,” said Freddie’s Vice President and Chief Economist Frank Nothaft.
Click on the link at the top of the story for a copy of the outlook
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