What to Expect in 2014

Freddie Mac recently released its U.S. Economic and Housing Market Outlook for November showing that the major shift for the coming year will be a transition from a refinance-dominated mortgage market to the first purchase-dominated market the industry has seen since 2000.

Interest rates are expected to rise gradually throughout 2014 with the 30-year fixed-rate mortgage ending the year near 5 percent with affordability still strong in most markets. However, rising rates will hinder affordability in high-priced markets.

Projecting housing starts to rise to a 1.15 million pace in 2014, which should help to create around 700,000 new jobs and quicken the pace of economic growth.

Gains in home sales will be limited by continuing tight inventory in many markets, but anticipate sales to rise about 5 to 6 percent in 2014 from 2013 levels.

Expect home values to continue rising but at a more moderate pace, around 5 to 6 percent annualized. And expect multifamily property investments to continue to be relatively attractive as we enter 2014, compared with the first decade of the 2000s, based on the Freddie Mac Multifamily Investment Index.

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