Skip to Page Content | Skip to Site Navigation | Skip to Section Navigation

Freddie Mac March 2017 Outlook

How Affordability Affects Housing's Spring Season


MCLEAN, VA--(Marketwired - Mar 28, 2017) - Freddie Mac (OTCQB: FMCC) today released its monthly Outlook for March, looking at how affordability may start to bite in many markets heading into the spring homebuying season.

Outlook Highlights 

  • Since 2000, house prices have risen 76 percent, while per capita disposable income has risen by 72 percent by the end of 2016.
  • With inventory tight, home prices outpacing incomes and interest rates headed higher, affordability has declined, putting a pinch on prospective homebuyers.
  • The affordability pinch in many markets will sideline prospective buyers resulting in a modest decline in total home sales from just over 6 million in 2016 to an estimated 5.9 million in 2017.
  • The projected 25 percent decline in total mortgage originations for 2017 will come almost entirely from plummeting refinances.
  • However, historically low mortgage rates and strong house price appreciation could push more existing homeowners to tap their equity in the form of cash-out refinances, which reached an aggregate $57.7 billion for 2016.

Quote: Attributed to Sean Becketti, Chief Economist, Freddie Mac.

"Recent indications of stronger growth convinced the Federal Reserve to raise the Federal funds rate this month and to signal further increases later this year. These Fed actions are unlikely to derail the moderate improvements in growth and employment, but rising interest rates will reduce mortgage originations and put a cap on house sales in 2017. As we approach the spring homebuying season, housing will be financially out of reach for many buyers because they will be competing in an environment of tight inventory, rising house prices and rising mortgage rates.

"Additionally, based on our analysis of 2016 refinance activity, markets with the largest increase in house prices also experienced a high share of cash-out refinances. For example, in the Denver and Dallas metro areas the refinance cash-out share was above 50 percent for all borrowers who refinanced last year."

Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we've made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac's blog FreddieMac.com/blog.

CONTACT:
Chad Wandler
703.903.2446
Chad_Wandler@FreddieMac.com

 

The financial and other information contained in the documents that may be accessed on this page speaks only as of the date of those documents. The information could be out of date and no longer accurate. Freddie Mac does not undertake an obligation, and disclaims any duty, to update any of the information in those documents. Freddie Mac's future performance, including financial performance, is subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect the company's future results are discussed more fully in our reports filed with the SEC.


Print Email RSS            
         

Get RSS Feed

Sign Up For Email Alerts

Media Contact

For press inquiries only:

General
E-mail
(703) 903-3933

Non-press inquiries

Financial Results

CEO Don Layton discusses our 2016 financial results with the media.
Listen

Moving Housing Forward

See how our commitment to you and the nation is moving housing forward.

A Better Housing Finance System
housingfinance.jpg
We're leading the market with our innovative credit risk transfers.
Watch our video

Search News Room

Back to Top