S&P Global Ratings has issued a "mostly sunny" forecast for the North American housing market, calling for a 5% year-over-year increase in average national home prices.
The rating agency predicts that higher mortgage rates will act as a headwind for housing but that stronger economic fundamentals, such as lower unemployment and higher wages, will negate that impact. The agency's forecast calls for 30-year fixed-rate mortgages to carry a 4.1% interest rate, still very low by historical standards.
New-home sales will likewise continue to enjoy slow, steady growth in 2017, according to the forecast. The report projects a 6% increase in new-home sales for the year with deliveries expected to increase 10% to 12%.
The rating agency forecast $35 billion of issuance in the nonagency securitization market, meaning mortgages not backed by government-sponsored enterprises. Fannie Mae and Freddie Mac remain in conservatorship more than eight years after the financial crisis, and the S&P Global Ratings analysts do not expect that to change in the near term as tax reform, infrastructure investment, border security and trade agreements are likely higher priorities for the new administration.
S&P Global Ratings and S&P Global Market Intelligence are both owned by S&P Global Inc.