Fourth Quarter Forecast Released on January 14, 2021

Highlights from the forecast point to a strong housing market in 2021 fueled by record low interest rates and remote work.

  • The average 30-year fixed-rate mortgage is expected to be 2.9 percent in 2021 and 3.2 percent in 2022.
  • House price growth is expected to be 5.4 percent in 2021. In 2022, that rate is expected to decrease to 3.0 percent.
  • Home sales are expected to reach 6.5 million in 2021 and decrease in 2022 to 6.2 million homes.
  • Purchase originations are expected to increase to nearly $1.6 trillion in 2021 before dropping to $1.5 trillion in 2022.
  • Refinance originations are expected to be nearly $1.8 trillion in 2021 before falling to $895 billion in 2022.
  • Overall, Freddie Mac’s Forecast expects annual mortgage origination levels to be $3.3 trillion in 2021 and $2.4 trillion 2022.

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Top Market Themes for January 2021

In addition to the forecast, Freddie Mac’s Single-Family Top Market Themes supplemental research package sheds light on current housing trends.

  • Trends in COVID Forbearance Rates
    • COVID-19 cases driving path of recovery.
    • Share of loans in forbearance vary by investor type: Lower GSE forbearance rate is reflective of less risky portfolio profile.
  • Uneven Regional Recovery
    • Higher unemployment rate observed in state economies with higher share of leisure and hospitality.
  • New Housing Trends as a Result of COVID-19
    • Homebuyers are moving out of urban centers and expensive metros.
    • Remote work has increased migration.
  • Millennials Driving Housing Demand
    • Housing demand is expected to stay strong as more millennials enter their peak homebuying years, but barriers persist.
    • Millennial homebuyers represented more than half of the purchase mortgages in 2020.

Download Top Market Themes