According to Freddie Mac, they just released their U.S. Economic and Housing Market Outlook for May. It shows a pick-up in economic growth in the second half of 2011, but with unemployment lingering above 8 percent through year-end. A large number of workers unemployed for a long period remains the predominant force behind seriously delinquent rates on mortgages.
- Over 250,000 new jobs needed monthly, on a sustained basis, to reabsorb all the jobs lost since the recession.
- The rate of seriously delinquent mortgages (8.6 percent average) will likely trend lower during 2011, but continue to remain at extraordinarily high levels for an extended period.
- During the first quarter of 2011, home prices decreased by 2.8 percent nationwide.
- Positive signs: homebuyer affordability remains extraordinarily high, mortgage rates low, house prices are well off their cyclic peak and contract signings for existing home sales are up.
- Projecting a 5 percent increase in 2011 home sales over 2010, on a calendar year basis.
According to Frank Nothaft, vice president and chief economist for Freddie Mac, “While the labor market is moving in the right direction, it still has a long way to go before the unemployment rate moves sharply lower. And ditto for seriously delinquent rates on mortgages.”