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Freddie Mac says sales will rise in 2018 as new home starts increase

By Mike Wheatley | September 26, 2017

It might be a bit early to start making predictions for real estate in 2018, but that hasn't stopped Freddie Mac from attempting to do so. The mortgage servicing agency has just published its September Outlook report, which tries to gauge future activity in the real estate market, saying that new homes will become the "primary driver" of sales in 2018.

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The reason for this is that Freddie Mac expects to see more housing starts next year, with around 1.33 million new homes set to land on the market, up from 1.22 million this year.

Freddie Mac also reckons that 2018 will be a better year for real estate overall, with the total number of home sales expected to pick up by around two percent from 2017. In addition, it said it expects the rapid increase in housing prices around the country will also slow down in 2018, due to the uptick in housing starts and an expected, moderate increase in mortgage rates. Overall, Freddie Mac's report says home prices will rise by around 4.9 percent in 2018, which is significantly lower than the 6.3 percent growth in prices seen in 2017 to date. Mortgage rates also are up from near-record lows in 2016, prompting predictions that refinancings will fall to 25 percent of mortgage activity in 2018—the lowest share since 1990, according to statistics from Fannie Mae.

Even so, Freddie Mac says homeowners should still continue to build equity in their homes next year. In the second quarter of 2017, the dollar volume of equity cashed out was $15 million, up $1.2 million from the first quarter. As home prices rise, cash-out activity has been rising, too.

“The economic environment remains favorable for housing and mortgage markets,” says Freddie Mac chief economist Sean Becketti. “For several years, we have had moderate economic growth of about two percent a year, solid job gains, and low mortgage interest rates. We forecast those conditions to persist into next year.”

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected]
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