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Freddie Mac predicts housing rebound

The agency's chief economist goes against the grain on the housing market's future, siting jobs and low mortgage rates.

By MSN Money Partner Apr 18, 2011 12:26PM

This post comes from Brian O'Connell at partner site MainStreet.

 

MainStreet on MSN MoneyApparently, not all is lost for the housing market.

 

Freddie Mac just released a report (.pdf) penned by chief economist Frank Nothaft that paints a hopeful picture of the housing market just in time for the spring selling season.

 

"The housing market may also be poised to shake off the frigid sales pace of January and February, when new home sales slipped to the lowest pace since the Census Bureau began the series in 1963," the report states.  "Driven by low mortgage rates and home prices well below peaks, homebuyer affordability is at the highest level in at least 40 years, according to the National Association of Realtors. Indeed, sales contract signings for existing homes were up in February, positioning the market for a bounce up in settlements during the second quarter, the traditional time for the seasonal upswing in sales." Post continues after video.

Nothaft’s optimistic about real estate, despite the fact that so few other economists are willing to peg the "rebound" stake into the ground when it comes to housing. It's mostly because Nothaft likes what he sees in the U.S. job market. He cites a "stronger than expected" March unemployment number (it was 8.8% and the economy added 216,000 jobs, according to the U.S. Department of Labor).

 

And housing prices have dropped so low in the last three years that taken together, Nothaft believes these factors could create the perfect recipe for a spring rebound, especially as (hopefully) eager house-hunters start hitting those Sunday open houses across the country in coming weeks.

Other new data helps set the stage for a housing market rebound, too. Nothaft points out there was a bounce in "closed" home sales in February, and notes that this might spur a spring pick-up in housing.

 

"Expect to see a bit of spring in home sales activity during the second quarter," he says. "Sales contract signings for existing homes were up in February, positioning the market for a bounce up going into the traditional home-buying season."

 

All told, Nothaft estimates the U.S. residential real estate market will be up 5% in 2011, compared to 2010. He expects interest rates to remain low, despite some fresh evidence of growing inflation this year (particularly with consumer goods and energy costs).

 "With the Federal Reserve maintaining its accommodative monetary policy and Treasury note purchase program, short-term rates will remain low and supportive of household borrowing," he writes. He does note that long-term interest rates should "inch higher" in the second half of 2011, which could reduce the urge to refinance, but not keep new homebuyers away from the market.

 

Nothaft ends his missive just like he started it: on an upbeat note.

 

"Expect the economy and housing market to follow the cherry trees' lead: Shake off the cold and show a bit of spring in activity," he concludes.

 

But that's a lot of cold to shake off, and all the cherry blossoms in the world aren't going to change the fact that the U.S. housing market has been badly damaged. Nothaft seems to think this is the bottom, and that there's nowhere to go but up.

 

We hope that he's right.

 

More on MainStreet and MSN Money:

13Comments
Apr 18, 2011 10:20PM
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who believes anything coming out of fannie or freddie.
Apr 18, 2011 11:38PM
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That's kind of like Barney Frank saying he has decided to go straight.  We just aren't too inclined to believe anything or anyone connected with this trainwreck of an agency.

Apr 19, 2011 12:03AM
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Sure we believe them. Especially since they knew the crash was going to happen at least two years in advance. It's just another way for them to try to entice future homebuyers into buying a house where the value is still going down. Last year they said we hit bottom, well that surely seems not to be the case. Until they create some jobs that allows people to make decent living and not fast food or service jobs that were created during the Clinton years. You can twist the facts to where it appears there is new job growth, but in all reality the only jobs that are being created are low paying with no benefits. If they added the statistics showing the pay of the jobs being created Americans would be in for a rude awakening.
Apr 18, 2011 11:10PM
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This thing with jobless rates is just like the formula they use to tell us there is no inflation.  A bridge costs the government 40x what it cost in 1960.  True inflation is hidden by denial using formulas with inflated statistics.  Just like the job list and the housing market, and wall streets hedge funds and the collapse of the financial world since 2008.  They can use the same formulas to prove there is no deficite to!
Apr 19, 2011 5:08AM
Apr 19, 2011 12:06AM
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Another example of a frat party with our money.
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original post denied because it appear to be spam...P R O P A G A N D A   continued...

All of you and the media continuing your deceitful lies: should be HUNG...ASAP

Apr 19, 2011 2:41AM
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Cool, so like several years ago having a job is not important to buy a house. We will all hear positive stories now campaigning season is gearing up, unfortunately it will be all talk and no action.
Apr 19, 2011 7:43AM
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Damn...sounds kinda like what Fat **** Barney said ...Freddie and Fannie are in great shape...right before they failed !!!!  I wonder if Frank Nothaft received any money from them ?? They paid out millions to keep things quiet before...Barney took big bucks..lots of Congressmen did..Guess who was #3 on the "take list" for the most $$$ received????  Our fearless crook/ err leader...
Apr 19, 2011 10:28AM
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MSF7 You again are wrong on Barney Frank the real culprit was Bush and the Republicans not Frank. His statement at the time was correct before the CDS's started to kill the economy.

Learn something here


http://georgewbush-whitehouse.archives.gov/news/releases/2002/10/20021015-7.html

Apr 19, 2011 1:30AM
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  and with strings of them selling at a tenth there last selling price, buying one at that price and waiting and waiting and waiting till there other one is selling at a tenth the last  sale price.........
Apr 19, 2011 8:04AM
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Yep, And I'm sure that pigs now have learned to fly ...... They will say anything to con the public..
Apr 19, 2011 1:32AM
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  i have to fully believe that the prices will return to what they were and the screw job of the buyers and renters will return,  buggered..????????
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