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Posts by Frank E. Nothaft

Chief Economist Frank Nothaft

Chief Economist Frank Nothaft

Frank E. Nothaft is Freddie Mac’s chief economist. Nothaft is responsible for forecasts, research and analysis of the macroeconomy, housing and mortgage markets. He is also involved in affordable lending analysis and policy issues affecting the housing finance industry.

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4 Signs the Economy Is Gradually Returning to Normal

Freddie Mac's latest U.S. Economic and Housing Market Outlook concludes that the nation's economy is gradually getting back to a more normal level of activity, and therefore we expect to see housing demand and supply increasingly driven by fundamentals – in fact, we've already seen this in some markets.

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Mid-Year Economic Update

We, like many, expected more out of housing so far this year. Existing home sales were down 6 percent while new home sales were unchanged during the first five months of 2014 compared with the same time last year. Single-family housing construction was lackluster too with building permits slipping 2 percent and housing starts up a meager 1 percent over this same five-month window. One of the few bright spots in housing activity occurred for multifamily rentals: starts of buildings with five or more apartments jumped 16 percent during January through May compared with a year ago, and vacancy rates on rental apartments tracked by Reis dipped to 4.0 percent in the first quarter, down from 4.4 percent a year earlier, and the lowest recorded by the firm since 2000. That's great for the rental industry, but also means your rent is going up.

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New Freddie Mac Index Measures the Stability of Nation's Housing Markets

It has been more than seven years since the beginning of the deepest housing recession since the Great Depression. As housing activity fell, nervous speculation took off in the media and industry about when (if ever) housing would get back to normal. Given the pickup in sales, new construction, and home values over the past couple of years, it’s fair to ask if we’re there yet: is the U.S. housing market back to a normal range of activity with a good balance between demand and supply forces?

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2014: The Emerging Purchase Market

As we look forward to 2014, we see reasons to be optimistic about the economy. Led by a resurgent housing sector, 2014 should shape up to be better than 2013, with consensus forecasts placing economic growth in the 2.5 to 3.0 percent range, more than 0.5 percentage points better than is expected for 2013. A quickening in the recovery pace will also lead to more job creation and should push the unemployment rate below 7 percent, perhaps by mid-2014. We expect single-family home sales and housing starts to be at the highest level since 2007, and expect multifamily transactions and construction to post gains as well. Despite rising mortgage rates and continued property-value appreciation, housing will remain generally affordable in most parts of the country. With household formations expected to pick up and new home completions gaining more slowly, for-sale inventories may remain tight and vacancies low next year.

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Three Reasons America's Homebuyers Rely on the 30-Year Fixed-Rate Mortgage

Remember last year when the 15-year fixed-rate mortgage rate was an unbelievable bargain at just over 2.5 percent, the lowest in recorded history and about three-quarters of a percentage point below a 30-year fixed-rate loan? So everyone buying a house was getting a 15-year loan, right?  Nope. Thirty-year fixed-rate mortgages dominated – accounting for more than 85 percent of the home-purchase loan market in 2012.

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