Big Predictions for Housing for Next 2 Years

Home sales are projected to post some big gains in the next two years, according to Fannie Mae’s latest monthly economic outlook. Fannie Mae economists predict that existing-home sales will rise by 10.5 percent this year, and by 6.2 percent in 2014. The economists made even bolder projections for new single-family home sales -- growing 15.1 percent this year and 44.1 percent in 2014.

"We expect home prices to firm further amid a durable housing recovery, continuing to boost household net worth, gradually diminishing the population of underwater borrowers, and reducing incentive for strategic defaults," according to Fannie Mae’s report.

Fannie Mae projects that mortgage rates will stay low by historical averages this year, but the 30-year fixed-rate mortgage will rise from an average of 3.5 percent during the first quarter to an average of 4 percent during the final three months of 2013. During the fourth quarter of 2014, mortgage rates are projected to tick up to a 4.5 percent average.

Mortgage applications for purchases are projected to increase by 16.8 percent this year and by 17.1 percent in 2014. However, a decline in applications for refinancings will likely cause mortgage originations to be down 14.5 percent this year and by 31.4 percent in 2014, Fannie economists predict.

Source: “Fannie Mae sees housing upturn as 'intact',” Inman News

Housing to See 'Sustained Growth' According to Fannie Mae

The housing market is “on a sustained growth path,” according to the latest economic outlook by Fannie Mae’s Economic & Strategic Research Group. The report shows "One of the key developments for the housing market last year was the general consensus that home prices, on a national basis, bottomed earlier in the year and continued to build momentum, exhibiting robust year-over-year gains unseen since the housing boom."

Housing inventories are at the lowest since December 1994 and fewer distressed homes have helped to lift home prices, according to Fannie Mae economists.

Among some of Fannie Mae economists projections for this year:

Home prices: Fannie Mae economists predict that the median price of existing homes will increase 2.3 percent on an annual basis this year, reaching $181,000. The median price of a new home will likely increase 1.6 percent to $248,000. For 2014, economists predict that home prices will increase an extra 2.8 percent.  

Home sales: Existing-home sales will likely rise 11.5 percent in 2013, and new-home sales will rise 12.5 percent, economists predict.   

Mortgage rates: Rates will likely edge up slightly this year with 30-year fixed-rate mortgages projected to average 3.8 percent this year and rise to 4.4 percent in 2014.

Source: “Fannie Mae: Housing is 'on a Sustained Growth Path