Fuel prices, Freddie Mac predictions
December 28, 2015
Monday – December 28
Would you like that recliner gift wrapped? Big-ticket items like furniture spurred U.S. retail sales growth by 7.9 percent between Black Friday and Christmas Eve, according to MasterCard Advisors SpendingPulse. This was up from the 5.5 percent wrapped up last year during the height of holiday buying season. Online sales also grew 20 percent.
Adding fuel to financial woes, oil prices are near 11-year lows, coming in close to $37 a barrel today. Excess supply has more than cut prices in half since mid-2014. The Organization of the Petroleum Exporting Countries noted excesses of more than 2 million barrels per day. This oversupply is expected to continue the first half of 2016.
Finally, Freddie Mac ushers in the New Year with five predictions for 2016. Prediction one: the 30-year fixed-rate mortgage will average below 4.5 percent for 2016. Prediction two: despite gradually higher home loan rates presenting an affordability challenge, a strengthening labor market and pent-up demand will carry home sales momentum into 2016. Prediction three: home price growth will moderate to 4.4 percent. Prediction four: housing starts will increase 16 percent year-over-year and total home sales will increase 3 percent. Finally, higher interest rates will reduce the refinance volume and push overall mortgage originations lower in 2016 than in 2015.
