2016 Housing Outlook - Best Year in a Decade
With home sales, construction starts and housing prices predicted to reach peak levels, we expect 2016 to be the best year for housing in a decade.
In fact, we're forecasting mortgage interest rates will remain below 4 percent for the first half of 2016, with a likelihood that rates could remain there throughout 2016. Additionally, we believe the Federal Reserve will raise rates only twice this year, which will slow the pace of interest rate increases.
Read our March 31 Economic Outlook for a deeper dive into the factors that impact interest rates, including global economic conditions and the U.S. labor force.
A Closer Look
Although single-family housing construction starts have been slow, rent prices continue to go up. And that is encouraging more renters to consider the prospect of becoming a buyer.
With mortgage rates below 4 percent, financing as little as 3 percent down for a conventional mortgage and greater down payment options than ever (see below), many renters – Millennials in particular – are increasingly viewing homeownership as within reach.
To examine renters' views on homebuying in the post-financial crisis marketplace, Freddie Mac commissioned Harris Poll to survey more than 2,000 U.S. adults in a series of surveys.
When asked about their savings goals, 38 percent of renters surveyed said that making a down payment on a home was an "essential" or "high" priority. Among those whose rents have increased, that percentage went up to 47 percent.
Additionally, three age groups – Millennials, Generation X and Baby Boomers – were surveyed to determine the demographic most likely to purchase a home, versus continuing to rent, in the next three years. Here's what the survey results showed:
Down Payment Options
We know that down payment programs are not one-size-fits-all. Take advantage of these tools and resources to find the best down payment program for your borrowers:
- Visit Down Payment Resource®, our new partner that can help you uncover down payment assistance programs for qualified borrowers.
- Explore our Down Payment Assistance web page for tools and information, training opportunities and customizable collateral you can share with borrowers.
Avoid Homebuying Pitfalls
Share these helpful resources with your borrowers to avoid potential homebuying pitfalls:
- Ways to recognize and avoid fraud.