U.S. Economic and Housing Market Goes From Gloom to Boom in March

Freddie Mac released its U.S. Economic and Housing Market Outlook for March showing that as we head into the spring homebuying season, continued low mortgage rates, increasing house prices, and gradually improving consumer confidence will help support increased home sales. Compared to 2012, expect home sales to be up eight to 10 percent for 2013. Housing starts are expected to increase to 950,000 units for 2013, compared to 780,000 in 2012. In 2012, real estate added $1.5 trillion to balance sheets, and residential mortgage debt outstanding increased by 0.1 percent in the fourth quarter of 2012, indicating household deleveraging might be drawing to a close. Because of sequestration spending reductions, expect the unemployment rate in 2013 to average about 7.8 percent, essentially flat for the year or about 0.25 percentage points higher than it otherwise would have been. Regardless, the housing wealth effect is taking hold in the broader market which should translate into the healthiest spring homebuying season since 2007. "History shows us not all economic recoveries are created equal and consumer confidence mirrors this fact. With the spring homebuying season upon us, the recent highs in the stock market are a welcome signal of better times ahead,” said Frank Nothaft, Freddie Mac vice president and chief economist. “But it will be the gradually declining unemployment rate and steadily improving housing market that will deliver broad-based economic benefits for Americans and, in turn, support the overall recovery."