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November 2011 U.S. Economic and Housing Market Outlook

November 22, 2011

Despite positive economic signs consumers remain worried about their financial well being – a major reason why home sales remain relatively lackluster, according to Freddie Mac’s U.S. Economic and Housing Market Outlook for November.

The report shows originations are projected to see a boost from the extension and enhancement of the Home Affordable Refinance Program (HARP) and the extremely low fixed-rate mortgage rates that currently prevail in the market.

Outlook Highlights

  • Domestic aggregate demand (consumers and businesses), rose 3.6 percent annualized during the third quarter, the second biggest quarterly gain in five years.
  • Non-residential fixed investment (buildings, equipment and software) expanded at a striking 14 percent pace during the third quarter; residential investment also rose a little bit for the second straight quarter.
  • The Freddie Mac House Price Index for the U.S. has recorded a 25 percent cumulative decline since the peak in mid-2006 through September 2011.
  • Ten-year Treasury yields continue to hover in a narrow band around 2.0 percent, while 30-year conforming fixed-rate mortgages have averaged about 4.0 percent in recent weeks.
  • The effect of the extended and enhanced HARP on single-family originations, assuming about $200,000 loan amount on average, is likely to be around $200 billion to $300 billion over 2012 and 2013, with most of the additional volume falling in the first year.



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