Economic & Housing Research

July 3, 2008 Mortgage rates reversed their three-week rise, falling this week after the release of the latest Federal Reserve’s (Fed) policy statement that it expects inflation to moderate later this year and the reporting of May’s timid increase in core personal consumption prices.  According to recent trading activity in federal funds futures, market participants lowered somewhat their expectations of future rate hikes by the Fed compared to last week. Housing affordability fell in May due to gains in median house prices during the month, according to the National Association of Realtors.  However, even with the recent erosion in affordability, homes were still more affordable in May than during the 2005-2006 period of skyrocketing house prices.  In 2006, using average mortgage rates in effect at that time, a family with the national median income could afford the monthly payment on a traditionally underwritten mortgage that would allow them to buy 106% of the national median- priced home using the NAR measure.  In May of this year, that family could afford the mortgage payment on a home that was priced at 125 percent of the median-priced home , or one costing roughly $260,000, according to the NAR. » Next Commentary: July 10 Weekly Commentary - June 26, 2008 Weekly Commentary - June 19, 2008

Monthly Outlook

Freddie Mac compiles data on major economic and housing and mortgage market indicators and offers annual forecasts based on those indicators. As of August 2007, we are posting summary tables of projection data only.

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Opinions, estimates, forecasts and other views contained in this page are those of Freddie Mac's Office of the Chief Economist, do not necessarily represent the views of Freddie Mac or its management, should not be construed as indicating Freddie Mac's business prospects or expected results, and are subject to change without notice. Although the Office of the Chief Economist attempts to provide reliable, useful information, it does not guarantee that the information is accurate, current or suitable for any particular purpose. © 2008 by Freddie Mac. Information from this page may be used with proper attribution.