Housing to remain affordable in 2014

November 25th, 2013

Freddie Mac predicts that purchase mortgages will top refinancing in 2014 as the housing market transitions to sustainable growth.

Freddie Mac’s recently released U.S. Economic and Housing Market Outlook for November predicted that housing will remain affordable in 2014.

According to the forecast, there will be an increase in mortgage rates, as average 30-year fixed-rate mortgages will be around 5 percent. However, affordability will be unaffected in most average- and low-priced markets. Additionally, housing price appreciation will slow and rise to a sustainable pace of 5 to 6 percent on an annual basis.

The strength of affordability will be bolstered by economic gains. Freddie Mac predicted economic growth of 2.5 to 3 percent in 2014 as well as an unemployment rate that is less than 7 percent by the middle of the year.

With all the gains, more people will be able to buy a home.

“For the first time since 2000, we’re going to see the mortgage market dominated by purchase activity as the refinance share drops below 50 percent,” stated Freddie Mac chief economist Frank Nothaft. “And with mortgage rates rising, we’re also going to see the home-sales gains as well as the impressive house price growth begin to moderate to more sustainable levels.”