Quarterly Research Package and Forecast Q4 2020
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.
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.