Q3 2022 Research and Insights

Macroeconomic Outlook

  • Rapid economic growth in 2021, but growth now slowing due to fiscal, monetary and inflationary drags with high prospect of a recession in 2023.
  • Labor market starting to moderate even as unemployment rate is close to 50-year low.
  • Inflation surges with the rotation of consumer spending into services aiding in inflation broadening and becoming more persistent.

Housing & Mortgage Market Outlook

  • Housing demand hit hard by worsening affordability; risks remain on downside as buyers may choose to wait and see.
  • Mortgage rates increase at the fastest pace in 40 years.
  • Sales of existing homes are plunging and down 24% from a year ago and down 14% compared to pre-pandemic in August 2019.
  • Mortgage applications are down around 50% from their peak, and 33% compared to 2019’s average, suggesting further softening in sales coming.
  • While inventory has increased, it remains low by historical standards.
  • Month-over-month home price growth appears to be slightly negative overall, with pronounced weakness out West.

Distress Supply, Delinquencies & Foreclosures

  • Mortgage Delinquencies and Foreclosures ticking up slightly.

Fourth Quarterly Forecast Released on October 21, 2022

  • The 30-year fixed-rate mortgage (FRM) is expected to average 5.4% in 2022 and 6.4% in 2023. In 2021, the 30-year FRM averaged 3%.
  • House price growth is expected to average 6.7% in 2022, declining to -0.2% in 2023. House price growth was 17.8% in 2021.
  • Home sales are expected to be 5.8 million in 2022, declining to 5.1 million in 2023. Home sales were 6.9 million in 2021.
  • Home purchase mortgage volumes are expected to increase $1.8 trillion in 2022 slowing to $1.6 trillion in 2023. Purchase originations were $2 trillion in 2021.
  • Refinance originations are expected to decline to $0.7 trillion in 2022, slowing further down to $0.3 trillion in 2023. Refinance originations were $2.8 trillion in 2021.
  • Overall, annual mortgage origination levels are expected to be $2.6 trillion in 2022, and $1.9 trillion in 2023, down from $4.8 trillion in 2021.

 

Download the Reports

Economic & Housing Market Themes and Outlook

Freddie Mac’s Single-Family Top Market Themes research package sheds light on current macroeconomic outlook, housing and mortgage outlook, and delinquencies and foreclosures.

Fourth Quarter Forecast

Rapidly rising rates and declining demand are driving a housing market slowdown.