Freddie Mac Economist: Housing, Mortgage Markets Remain Bleak
03 April 2009 - 7:10AM
Dow Jones News
The U.S. housing market continues to contract as the amount of
delinquent loan payments and defaults on mortgages rise, prompted
by high unemployment, a Freddie Mac (FRE) economist said on
Thursday.
Frank Nothaft, Freddie Mac's top economist, speaking before the
National Economist Club in Washington, said that while overall
near-term housing market projections remain bleak, sales of
existing homes are occurring.
However, Nothaft said there is a very high excess inventory of
homes and most of the homes being sold are foreclosure properties -
about 40%. "But I do think they are near the bottom and we will see
some turn up in the second half of the year," Nothaft said.
Still, various measures of U.S house prices will likely decline
throughout this year and through 2010, Nothaft said. "It'll be 2011
before we see any improvement or increase in these national U.S.
house price measures."
According to Nothaft, other trends in the housing and mortgage
markets include a direct correlation between unemployment and
states with the highest rates of delinquent mortgages, an increase
in Federal Housing Administration lending and a two percentage
point decline fixed-rate mortgage rates since October.
Nothaft, attempting to ease the sour housing data, said to
members of the economist club: "The good news is low mortgage
rates."
"That will help to promote affordability for home buyers and
provide refinancing opportunities for many owners who have loans,"
Nothaft said.
-By Darrell A. Hughes, Dow Jones Newswires; 202-862-6684; darrell.hughes@dowjones.com