The economic picture also has remained bleak, with unemployment rate remaining at about 9%, according to Freddie Mac’s Economic and Housing Market Outlook.
In part due to employment concerns, the rate of delinquent mortgages would remain high at 8.6%, although it is likely to trend lower later this year.
“While the labour market is moving in the right direction, it still has a long way to go before the unemployment rate moves sharply lower,” said Frank Nothaft, vice president and chief economist of Freddie Mac. “And ditto for seriously delinquent mortgages.”
The report predicts the unemployment rate will drop to as low as 7.7% in the fourth quarter of 2012.
Another positive is that homebuyer affordability remains extraordinarily high, said Nothaft. That, along with a strong Canadian dollar, has attracted many cross-border investments lately.
Even though mortgage rates are low, American buyers face difficulties getting loans as standards have tightened.
Freddie Mac projected a 5% increase in 2011 home sales over 2010, on a calendar year basis. And while home prices saw double-digit percentage drops in value in 2010, the housing outlook for Freddie Mac shows a more stable 2011 and 2012, building towards a recovery.
“We also expect a pick-up in economic growth in the second half of 2011, which should help to propel additional gains later this year,” said Nothaft.
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