Quarterly Research Package and Forecast Q2 2021

Top Market Themes for Q2 2021

COVID-19 and Recovery

• COVID-19 cases are at the lowest levels but are growing in certain regions.
• The economy in the United States is not at pre-pandemic levels yet.       

Recent Migration Trends

• The pandemic has accelerated long-standing migration trends in the coastal markets but slowed the outflow from low-cost regions.
• Consumers are reconsidering benefits of urban vs suburban living.
• COVID-19 is accelerating early retirement. Will they be moving?

Housing Affordability Concerns

• Inventory shortage continues to constrain affordability.
• Nationwide 54% of homes have sold above list price.
• Housing shortage is concentrated in entry-level affordable homes.

Current Recovery Better Than During the Great Recession

• Economy is recovering much faster compared to the Great Recession.
• House price appreciation is the highest on record and continues to be strong.
• Rising home prices are helping build equity.
• Household balance sheets and mortgage underwriting is better than during the Great Recession. 

Strong Housing Demand but Early Signs of Softening

• Home sales continue to be at levels not seen since the Great Recession.
• However, housing demand is showing signs of softening.

Forbearance Trends Continue to Improve

• As of mid-May, market active forbearances have accounted for 30% of all loans that have entered the program.
• The rate of loans in forbearance continue to decline.
• GSE portfolio is recovering at a faster pace.

Second Quarter Forecast Released on July 15, 2021

• The average 30-year fixed-rate mortgage (FRM) is expected to be 3.1 percent in 2021 and 3.7 percent in 2022. In 2020, the 30-year FRM averaged 3.1 percent. 
• House price growth is expected to be 12.1 percent in 2021, slowing to 5.3 percent in 2022. Growth was 11.3 percent 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.