Freddie Mac has revised downward its economic forecast for the remainder of 2016 following a tepid first quarter, but remains upbeat about the housing market.

Lower-than-expected figures for consumer spending, manufacturing, trade and auto and retail sales led the government-sponsored enterprise to lower its forecast for real GDP growth to 1.1% for the first quarter, from the previously estimated 1.8%. For the full year it expects 2% growth in GDP.

“Wage growth has been slow to materialize at least partially due to remaining slack in the labor market,” Freddie said.

Nonetheless, the company has a positive outlook on the housing market.

Declining Treasury yields have led to similar drops in the national average for a 30-year fixed-rate mortgage. As of April 14 the average rate was 3.58%, the lowest since May 2013. Since the start of the year the 10-year Treasury rate has fallen 44 basis points and the 30-year fixed mortgage rate has fallen 40 basis points.

Job growth and lower rates have supported rising home sales. Housing starts are expected to increase by roughly 200,000 in each of the next two years, which should help alleviate the pressure on inventory, Freddie said.

Rising home sales are expected to cause mortgage debt outstanding to rise 3.5% in 2016 and 4% in 2017. Lower rates are also expected to boost refinancing activity. Freddie Mac revised upward its estimate for one- to four-family mortgage originations by $50 billion to $1.7 trillion.

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