The US Labor Dept Jobs report of 38,000 new jobs in May was a set back to the Fed’s expected rate increase and a departure from the job creation pace four times higher than reported. GDP growth for Q1 has been downwardly revised by Freddie Mac to 1.1% from 1.8% a major slowdown. In their Report Freddie Mac said, “We expect Housing to be an engine of growth. Construction activity will pick up as we enter spring and summer months, and rising home values are expected to bump up, however, an average of 4%over the full year of 2016.” The Report further said that 2016 is expected to be the strongest year for home sales since 2006 in the pre recession period despite persistently tight inventory of for sale homes.
Freddie Mac Report said, “Sales were slow in the first quarter, v=but trends in mortgage purchase applications remain robust and we expect home sales to accelerate throughout the second quarter of 2016 as we approach peak home buying season.” On the demand side of the equation, if millennials shift into home buyers and household formations return to normal levels from the delayed formation we have witnessed, demand would increase to raise the competition for new listings into an unhealthy level. Continued delay in those demand metrics would promote a more stabilized status of supply and demand.