Having weathered a soft patch that lasted through the fall, winter and early spring, housing markets are showing signs of a rebound that should continue for the rest of the year, according to the latest forecast by economists at Fannie Mae.
Although the revival won’t be enough to push 2014 existing-home sales past last year’s mark, strong growth for 2015 is foreseen.
After getting off to a slow start, Fannie Mae projects existing-home sales will end up declining 2.4 percent from 2013 to 2014, to 4.97 million. Not bad, considering sales were off by more than 7 percent during the first five months of the year compared to the same period the year before.
But Fannie Mae is forecasting that the current rebound in sales will continue next year, with existing-home sales projected to grow by 5.3 percent in 2015, to 5.23 million.
One surprise this year has been the decline in mortgage rates, even as the Federal Reserve tapers its purchases of mortgage-backed securities. Rates on 30-year fixed-rate loans have fallen 40 basis points since the beginning of 2014 and continue to hover near lows for the year.
Fannie Mae economists expect mortgage rates to rise only gradually, to about 4.5 percent a year from now, although improving economic conditions could goose market expectations that the Fed will tighten monetary policy and cause mortgage rates to rise faster.
Fannie Mae noted that total housing inventory has grown in recent months, but strong sales in May pushed down the months’ supply of homes by one-tenth, to 5.6 months, still below its historical average.
Tight inventory has constrained home sales for many months, but has trended upwards in 2014, according to data from the National Association of Realtors.
Fannie Mae is projecting that purchase loan mortgage originations will be down 4.8 percent this year, to $697 billion, but rebound by 15.9 percent next year, to $808 billion.
Mortgage volumes should be bolstered this year by a projected 5.6 percent increase in the median price of existing homes, to $208,000. The median price of an existing home is expected to grow 4.3 percent in 2015, to $218,000.