Market Research | February 12, 2021

Quarterly Research Package and Forecast Q4 2020

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.

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.