After the significant improvements seen across the housing industry throughout last, many experts said that growth in 2013 couldn’t match it. However, one major player in the industry believes the improvements could be rather similar after all.
Improvements across the entire economy that are expected for this year will likely cause the housing market to experience gains on roughly the same level as those seen in the first 11 months of 2012, according to the latest U.S. Economic and Housing Market Outlook issued by the government-sponsored mortgage backing giant Freddie Mac. From January to November 2012, the national average home price rose 9 percent on an annual basis, and similar projections are now being made for the entirety of 2013, which would be a boon to current homeowners who are still living under negative equity.
These steps forward for the housing market are likely being driven by broader economic improvements, the report said. For instance, there were 155,000 new jobs created across the country in December alone, driving employment increases to a total of 1.86 million for the year. That was also the highest number seen since 2006, prior to the start of the recession.
Moreover, economists at Freddie Mac believe that unless ongoing fiscal debates in Washington, D.C., derail the national economy’s growth, there should be about 2 million new jobs created in the coming year, the report said. That, in turn, will continue to drive down the national unemployment rate, which held steady at about 7.8 percent in December, which will then likely encourage the Federal Reserve Board to keep interest rates near their current, extremely affordable levels.
“As we begin 2013, the economy is undoubtedly at a better place now than at this time in 2012,” said Freddie Mac vice president and chief economist Frank Nothaft. “And despite the clouds of fiscal uncertainty facing the country, positive jobs reports and the strengthening housing market continue to be the bright spot as we begin the New Year.”
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Gains in the housing market are generally believed to drive broad economic improvement, and vice versa. Even as home prices rise throughout the coming year, it’s likely that the continued low rates and high affordability will continue to drive potential buyers into the market, and experts believe current homeowners who are escaping underwater mortgages may rise to meet the increased demand.
Image: Images_of_Money, via Flickr