Freddie Mac lowered its forecast for 2014 home sales today in a new report issued by the government-sponsored entity this morning.

While Freddie thinks new home construction will continue to grow, predicting an 18 percent increase in new home sales this year, it lowered its overall home sales projection to 5.5 million from 5.6 million, based on lower sales volume through the first two months of the year.

Freddie also predicts the spike in house prices will slow, with appreciation moderating to an annual growth of 5 percent in 2014.

"We’re getting mixed signals as we start the spring home buying season. Tight inventory may pose a significant challenge for home buyers in many markets across the country, which may result in higher home prices and sales being lower than expected," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement. "This is good news for those markets that have room to run on the house price appreciation front, but it’s also going to increase the affordability pinch in many markets, especially along the country’s east and west coasts."

Increased consumer confidence and decreasing unemployment across the country should help to strengthen the market, according to the Freddie Mac report. All 50 states saw declining unemployment rates, with 18 states experiencing at least a half percentage point reduction in their unemployment rate over the previous three months ending in February.

The GSE also expects interest rates to continue to gently rise, ending the year around 5 percent.