Freddie Mac released its U.S. Economic and Housing Market Outlook for May showing a pick-up in economic growth in the second half of 2011 but with unemployment lingering above 8 percent through year-end. A large number of workers unemployed for a long period remains the predominant force behind seriously delinquent rates on mortgages.

Outlook Highlights

- Over 250,000 new jobs needed monthly, on a sustained basis, to reabsorb all the jobs lost since the recession.

- Unemployment rate moves up to 9 percent; average unemployment duration was 38.3 weeks in April, down slightly from the record of 39 weeks in March.

- The rate of seriously delinquent mortgages (8.6 percent average) will likely trend lower during 2011, but continue to remain at extraordinarily high levels for an extended period.

- During the first quarter of 2011, home prices decreased by 2.8 percent nationwide.

- Positive signs: homebuyer affordability remains extraordinarily high, mortgage rates low, house prices are well off their cyclic peak and contract signings for existing home sales are up.

- Projecting a 5 percent increase in 2011 home sales over 2010, on a calendar year basis.

Quotes

Attributed to Frank Nothaft, Freddie Mac, vice president and chief economist.

"While the labor market is moving in the right direction, it still has a long way to go before the unemployment rate moves sharply lower. And ditto for seriously delinquent rates on mortgages."