Economic & Housing Research

August 28, 2008 Interest rates for fixed-rate mortgages drifted down this week following economic reports of continued weakness in the economy. July's leading economic indicators fell by more than the market consensus and manufacturing slowed in both the Philadelphia and Richmond regions. ARM rates were a little higher after the release of the August 5th FOMC minutes which hinted that the next change in the overnight bank lending rate might be an increase. On the housing front, however, this week's economic reports had a few encouraging findings. Home prices fell at a slower pace for the fourth straight month in June, based on the S&P/Case-Shiller® 20-city composite index. In addition, nine metropolitan areas exhibited monthly gains, compared to only seven in May. A similar result was reported by OFHEO for its purchase-only House Price Index, which showed that price declines moderated significantly on a seasonally adjusted basis over each month during the second quarter. Lower prices have enhanced affordability in a number of markets, and the Conference Board reported that the share of households planning to buy a home within six months rose to the highest level since March. This bodes well for future home sales: In July, the number of months of supply for unsold new homes fell to 10.1 months, the lowest since February of this year, and the length of unsold single-family existing homes (excluding condos and co-ops) also saw an improvement for the month; however, including condos and co-ops the resale inventory edged up. » Next Commentary: September 4 Weekly Commentary - August 21, 2008 Weekly Commentary - August 14, 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.