Freddie Mac has released its U.S. Economic and Housing Market Outlook for November showing what a healthy national housing market should look like taking into account recent trends, key housing indicators and the shifting demographic patterns that will define a new and realistic trajectory over the next five years. A healthy housing market should have activity below the levels recorded during the peaks of the prior decade.
Outlook Highlights. What a healthy housing market should look like:
- Housing starts increasing to about 1.7 to 1.8 million dwellings per year compared with 2.1 million in 2005.
- Home sales increasing to about 5 percent of the housing stock, or about 6.5 to 7 million homes per year, compared with sales of 7 percent of the stock in 2005.
- U.S. house price appreciation rising gradually to about 3 percent per year compared to 11 percent of 2005.
- Vacancy rates easing further to about 1.7 percent on for-sale homes and 8 percent for rental homes, down from peaks of about 3 percent in 2008 and 11 percent in 2009, respectively.
- Serious delinquency rates nearing 2 percent, down from a peak of 9.5 percent in early 2010.
"What a healthy housing market should look like will dismay those who keep comparing housing to what it was during its peak years," says Frank Nothaft, Freddie Mac vice president and chief economist. "However, taking into account recent trends, key housing indicators and the shifting demographic patterns that will define a new and realistic trajectory toward a healthy housing market, the long-term prognosis is promising – just don't expect the housing market to wake up at 98.6 degrees tomorrow morning."
A short preview video and the complete October 2012 U.S. Economic and Housing Market Outlook are available. Freddie Mac compiles data on major economic and housing and mortgage market indicators and offers forecasts based on those indicators.