Freddie Mac forecasts a 5% increase in 2011 home sales over 2010, according to its U.S. Economic and Housing Market Outlook for April. The report also contends that refinancing will likely account for a smaller share of loan applications later this year as wealthy borrowers decrease and mortgage rates increase. “Expect to see a bit of spring in homes sales activity during the second quarter,” said Frank Nothaft, VP and chief economist at McLean, Virginia-based Freddie Mac. Nothaft continued, “Sales contract signings for existing homes were up in February, positioning the market for a bounce up going into the traditional home-buying season.”
The expected pick-up in home sales is due to recent positive employment reports, the Market Outlook reveals. Unemployment declined for the fourth straight month to 8.8%, and net employment increased by 216,000 jobs. Real estate employment was up by 10,000 jobs since last November. The report also calculates that the share of adjustable-rate mortgage loans will be 7% in 2011 compared to the 5% 2010 average. Freddie Mac compiles data on major economic and housing and mortgage market indicators and offers forecasts based on those indicators.