Freddie Mac Releases August Economic And Housing Market Outlook

August 9, 2012

The so-called “shadow inventory” might not be as foreboding as many thought because the excess of REO homes is being absorbed at a high rate, according to Freddie Mac’s U.S. Economic and Housing Market Outlook for August.

Outlook Highlights

  • The Freddie Mac House Price Index for the U.S. showed a 4.8 percent gain from March to June 2012, the largest quarterly pickup in eight years; the national index posted a June-to-June rise of 1 percent, the largest annual appreciation since November 2006.
  • Rental vacancy rates have fallen to 8.6 percent, the lowest since the second quarter of 2002. The for-sale vacancy rate has dipped to 2.1 percent, the least since the second quarter of 2006.
  • Nationally, the for-rent market now appears to be in relatively good balance, with the rental stock close to overall rental demand, resulting in "normal" vacancy levels.
  • This continuing shrinkage in excess vacant stock is important because it means that in most markets the REO homes on the for-sale market are not competing with an oversized vacant housing inventory.
  • Even if national indexes dip in the seasonally weak autumn and winter months, the declines probably won't be big enough to erase the good second-quarter news on home values.
Click here to watch a video about the report.