Freddie Mac analysts think home sales bottomed in the first three months of 2009 at an annual rate of 4.46 million per year, and will post steady gains each quarter to reach a pace of 5.85 million sales per year by the fourth quarter of 2010.

Freddie Mac analysts think home sales bottomed in the first three months of 2009 at an annual rate of 4.46 million per year, and will post steady gains each quarter to reach a pace of 5.85 million sales per year by the fourth quarter of 2010.

Sales of both new and existing detached single-family homes are expected to bottom this year at 4.72 million — down 37 percent from the 7.46 million transactions closed in 2005 — before rebounding to 5.5 million next year, Freddie Mac said in its July 2009 Economic and Housing Market Outlook.

Through May 2009, Florida has posted nine consecutive months of growth in sales, and California has posted 14 months of growth in a row, the report noted.

"Many of these sales, of course, are distressed sales, consisting of short sales and sales of foreclosed properties," the report said. "Nevertheless, that indicates that there are ready buyers at current prices, and these distressed sales do clear out the stock of for-sale homes."

The consistency of the improvement suggests these markets may have bottomed, the report said. Although home prices tend to lag, there are also signs of "the seeds of turnaround" in prices, Freddie Mac said. Although national home prices are expected to continue falling for the remainder of this year and next, the pace of declines is projected to be much more gradual next year.

The Standard & Poor’s Case-Shiller Home Price Index, for example, showed prices falling at an annual rate of 26.6 percent during the first three months of the year. The report projects that the index will show the annual rate of decline slowing to 10 percent during the third quarter of this year, and shrinking each quarter of 2010 from a high of 5 percent to 1 percent.

Freddie Mac analysts see unemployment peaking in the final three months of this year at 9.9 percent, but persisting at an average of 9.7 percent throughout 2010. The "dismal jobs outlook" may delay economic recovery but is unlikely to derail it, Freddie Mac analysts said. …CONTINUED

Rates on 30-year fixed-rate mortgages are expected to continue rising from their low of 5 percent in the second quarter of this year, reaching 5.5 percent in the final quarter of 2009 and 6 percent by the end of 2010. At 5.8 percent, however, the projected average for 30-year fixed-rate mortgages would still be low by historic norms.

A boom in refinancing is expected to push mortgage originations to $2.3 trillion in 2009 — a 35 percent increase from last year — before retreating to $2.175 trillion in 2010. Refinancings are expected to account for 67 percent of originations this year.

Freddie Mac analysts last month were projecting that an even bigger refinancing boom would push total originations to $2.7 trillion in 2009, with refinancings accounting for 73 percent of the total.

The Mortgage Bankers Association last month made even more drastic revisions to its projections, saying rising interest rates and a slow start to the Obama administration’s Making Home Affordable loan refinance program had cooled the refi boom (see story).

In March, the MBA projected $1.96 trillion in refinancings would push total loan originations to $2.78 trillion. Last month, the MBA said it expected refis would total closer to $1.3 trillion, and total originations $2.03 trillion.

***

What’s your opinion? Leave your comments below or send a letter to the editor.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×