“The good news for 2015 is that the U.S. economy appears well poised to sustain about a 3 percent growth rate in 2015 — only the second year in the past decade with growth at that pace or better,” Frank Nothaft, vice president and chief economist at Freddie Mac, said in a statement accompanying the November report.
“There are several reasons for the better macroeconomic performance,” Nothaft said. “Governmental fiscal drag has turned into fiscal stimulus, lower energy costs support consumer spending and business investment, further easing of credit conditions for business and real estate lending support commerce and development, and more upbeat consumer and business confidence, all of which portend faster economic growth in 2015.
“And with that,” he said, “the economy will produce more and better-paying jobs, providing the financial wherewithal to support household formations and housing activity.”
The national outlook bodes well for the Bay Area, where the economy is already running strong. Continued regional growth, supported by a healthy U.S. economy, will keep Bay Area residents working, homebuyers in the market, and sellers eager to trade up to higher-priced properties.
Economists at Freddie Mac made the following projections for U.S. housing in 2015:
MORTGAGE RATES: Interest rates will likely be on the rise next year. In recent weeks, the 30-year, fixed-rate mortgage has dipped below 4 percent. But by next year, Freddie projects mortgage rates to average 4.6 percent and inch up to 5 percent by the end of the year.
HOME PRICES: By the time 2014 wraps up, home appreciation will likely have slowed to 4.5 percent this year from 9.3 percent last year. Appreciation is expected to drop further to an average 3 percent in 2015.
HOUSING STARTS: Homebuilding is expected to ramp up in the new year, projected to rise 20 percent from this year. That will likely help total home sales to climb by an estimated 5 percent, reaching the best sales pace in eight years.
SINGLE-FAMILY HOMES: Mortgages for single-family homes have been falling in 2014, but not entirely because of tighter lending policies. Refinancing volume dropped steeply in 2014 and is expected to slip an additional 8 percent in the year ahead. Refinancings are expected to make up only 23 percent of mortgages in 2015; they had accounted for more than half in recent years.
MULTIFAMILY HOMES: Mortgages for apartments and other multifamily housing have surged 60 percent between 2011 and 2014 and are expected to continue rising in 2015.
(Image: Flickr/Leo Reynolds)