Freddie Sees Home Sales Rising in '09

Though home buyers will be in for some big bargains through the end of 2009, they may have missed the best opportunities for low mortgage rates, according to Freddie Mac's(FRE Quote) economic outlook released today.

The government-backed mortgage lender predicted that housing sales will start climbing again in the first quarter of 2009, but that prices will keep falling through the end of next year.

Freddie expects a 13.9% decline in home sales overall this year, followed by a 5.7% uptick in 2009. Freddie indicated that the bottom was reached in the second quarter and that sales will climb incrementally this quarter and those that follow.

However, Freddie predicted that prices will keep ticking downward, with declines moderating toward the end of next year. The lender estimates an 11.9% drop this year overall and a more moderate 3.3% decline in 2009, based on the S&P/Cash-Shiller home-price index.

Freddie's also outlook indicated that the bottom for mortgage rates already passed during the first quarter, when rates fell sharply, mirroring the cuts to the Federal Reserve's interest-rate target. Freddie expects that both 30-year fixed-mortgages and one-year Treasury-indexed adjustable-rate mortgages will return back to their recent highs by the third quarter of 2009.

The lender predicted that fixed mortgages will decline two-tenths of a percentage point this year to 6.1%, then climb to 6.5% next year, overall. It expects adjustable-rate mortgages to drop three-tenths of a point to 5.3% in 2008, then climb back up to 5.6% next year.

A full review of Freddie's economic outlook is available on its Web site and visitors can check www.BankingMyWay.com for the best local rates.