Market Strength to Continue Next Year, Freddie Predicts
December 2, 2019
You can expect the housing market to continue gathering strength in the new year. Freddie Mac predicts 2019 to wrap up with 6 million home sales for the year and 6.1 million in 2020, according to the mortgage giant's November forecast.
Freddie Mac Chief Economist Sam Khater acknowledges that the economy saw increased volatility in November from ongoing trade disputes. “However, given low interest rates, modest inflation, and a strong labor market, the U.S. housing market continues to stand firm, and our forecast is for the housing market to maintain momentum over the next two years,” Khater says.
Freddie predicts that the popular 30-year fixed-rate mortgage will have an interest rate of about 4% for the remainder of 2019 and decrease slightly to 3.8% in 2020 and 2021. Economists predict that home price growth will moderate somewhat. Freddie predicts that through 2021, annual rates of home price growth will be 3.2% for 2019 and then drop slightly to 2.9% in 2020 and 2.1% in 2021. Economists are still predicting increases in purchase mortgage originations, a gauge for home sales, from $1,255 billion in 2019 to $1,299 billion in 2020.
Also, economists are predicting a surge in refinancing activity as mortgage rates remain low. They predict a growth of $846 billion this year in refinance mortgage originations and then taper slightly to $834 billion in 2020.
Updated: July 10, 2020