RISMedia

Freddie Mac: Real Estate Market Will Remain Strong Through 2021

By RISMedia Staff

Despite concerns over inflation, Freddie Mac's quarterly forecast reports a robust real estate market that may be softening when it comes to demand, predicting a strong performance for the remainder of the year. 

The details:
- The average 30-year fixed-rate mortgage is expected to be 3.1% in 2021 and 3.7% in 2022. In 2020, the 30-year averaged 3.1%.

- House price growth is expected to be 12.1% in 2021, slowing to 5.3% in 2022. Growth was 11.3% in 2020.

- Home sales are expected to reach 6.9 million in 2021, remaining flat in 2022. Sales were 6.5 million in 2020.

- Purchase originations are expected to increase to $1.8 trillion in 2021 and $1.9 trillion in 2022. This is up from $1.5 trillion in 2020.

- Refinance originations are expected to soften, declining from $2.2 trillion in 2021 to $713 billion in 2022. This is down from $2.6 trillion in 2020.

- Overall, annual mortgage origination levels are expected to be $3.9 trillion in 2021 and $2.6 trillion 2022. These levels were $4.1 trillion in 2020.

The takeaway:
“As the economy continues to mend, the housing market remains strong even as certain obstacles have begun to slow sales across the country,” said Sam Khater, Freddie Mac’s chief economist. “Of note, high house price growth has been buoyed by increased demand due to low mortgage rates, disposable after-tax income that has risen during the current recession and a major shortage of housing supply relative to our population.”

“Despite the housing market’s recent highs, there are indications of softening demand in recent home purchase mortgage applications data," Khater added. "We expect refinance activity to soften as higher mortgage rates dampen activity. Overall, we forecast total originations to be $3.9 trillion in 2021 before declining to $2.6 trillion in 2022.”


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