Gloomier Economic Outlook Brightens Housing Outlook

Freddie Mac's forecast for June sees more dark clouds than usual, but few of those are on the housing front.  The company's Economic and Housing Research Group notes that some of those gathering clouds, concerns about global growth and the lingering trade problems, have pushed long-term interest rates to their lowest level since the fall of 2017, 3.82 percent as of the first week of June. That is good news for the industry and consumers.

The downturn is not viewed as a flash-in-the-pan and Freddie's economists have revised downward some of their earlier Treasury rate forecasts.  The 10-year note yield is expected to decline to 2.4 percent and 2.5 percent in 2019 and 2020, respectively. They also lowered the 1-year Treasury rate forecast to 2.2 percent this year before increasing to 2.3 percent in 2020.  Mortgage rates should follow suit, with the 30-year fixed-rate mortgage averaging 4.1 percent in 2019, before increasing modestly to 4.2 percent in 2020.

May Uptick in Builder Confidence Proves Fleeting

The National Association of Home Builders' (NAHB's) measure of builder confidence broke out of its multi-month slump in May, rising 3 points.  Much of that gain was reversed this month as the NAHB/Wells Fargo Housing Market Index (HMI) dropped by 2 points to 64, returning to the low- to-mid-60s range it has occupied since the first of the year. "While demand for single-family homes remains sound, builders continue to report rising development and construction costs, with some additional concerns over trade issues," said NAHB Chairman Greg Ugalde. "Despite lower mortgage rates, home prices remain somewhat high relative to incomes, which is particularly challenging for entry-level buyers," said NAHB Chief Economist Robert Dietz. 

Calabria and Carson: Housing Leaders Talk Reform, Accomplishments

Attendees at the Ginnie Mae Summit commemorating the agencies 50^th anniversary on Thursday heard from both Dr. Ben Carson, Secretary of the Department of Housing and Urban Development (HUD) and Dr. Mark A. Calabria, newly confirmed director of the Federal Housing Finance Agency (FHFA).  Each addressed their plans for updating their respective housing finance components. Calabria spoke first to the increasing role of non-bank mortgage originators. In 2013, he said, non-banks originated 30 percent of the mortgages sold to one of the government guarantee programs. By February of this year, that footprint had doubled to 60 percent.