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.
Four areas in particular are worth noting:
The economic growth and labor market gains we saw in the second quarter of this year are projected to continue, strengthening household formations and the housing sector. A recovering housing sector will sustain the rally in homebuilding despite likely increases in long-term interest rates. Increased construction activity will further accelerate the improvement in labor markets and fuel even more household formations and more housing demand. The result is an economy that gradually recovers.
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