Freddie Mac boosts outlook for home sales to 7.21 million

July 10, 2005|By BLOOMBERG NEWS

WASHINGTON - Freddie Mac, the No. 2 U.S. mortgage company, has increased its forecast for home sales, saying mortgage rates near historic lows will spur a record number of house purchases.

Sales of new and existing single-family homes may reach 7.21 million, the Federal Home Loan Mortgage Corp. said in a new report. A month ago, the McLean Virginia-based mortgage buyer called for 7.1 million home sales.

"The robust housing activity is directly related to the level of mortgage rates," said Frank Nothaft, Freddie Mac's chief economist, in the most recent report.

"Long-term mortgage rates are steadfastly refusing to go higher and, in fact, retreated throughout the second quarter," he said.

Last year, a record 7.17 million new and existing single-family homes were sold in the United States

Freddie Mac forecast that mortgage lending will reach $2.62 trillion this year, an increase from its previous estimate of $2.52 trillion. Last year, $2.73 trillion was lent for home purchases and loan refinancings, the third-highest on record.

The average U.S. rate for a 30-year fixed mortgage fell to 5.53 percent in the week ended June 30, the lowest since 5.52 percent in the week ended April 2, 2004, according to Freddie Mac data. Last week the rate rose to 5.62 percent, the mortgage company, which ranks behind No. 1 Fannie Mae, said Thursday.

The rate probably will average 5.8 percent this year, matching the record lows of 2003 and 2004, Freddie Mac said in the report. A month ago, the mortgage buyer forecast the rate would average 5.9 percent this year.

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