Top Market Themes for January 2022

U.S. Macroeconomic Outlook

  • COVID-19 cases are at an all-time high.
  • The unemployment rate falls below 4%, but the Great Resignation continues.
  • Inflation is at levels not seen since the 1980’s.

U.S Housing Market Outlook

  • Mortgage rates are rising, and affordability still remains high.
  • Inventory for available homes are near record lows while demand remains very strong.
  • Due to the lack of supply and high demand, house prices continue to increase 17% YoY in November.

U.S. Mortgage Market Outlook

  • New mortgage borrowers have exceptionally high credit scores leading to historically low rate of new delinquencies.
  • Foreclosures have dropped as a result of forbearance and other policies.
  • Refinance activity slowing down due to higher mortgage rates.
  • As refinance activity slows, mortgage originations are set to decline from record 2020.

Fourth Quarter Forecast Released on January 21, 2022

  • The average 30-year fixed-rate mortgage (FRM) is expected to be 3.6 percent in 2022 and 3.9 percent in 2023. In 2021, the 30-year FRM averaged 3.0 percent. 
  • House price growth is expected to be 6.2 percent in 2022, slowing to 2.5 percent in 2023. House price growth was 15.9 percent in 2021.
  • Home sales are expected to be 6.9 million in 2022, increasing to 7.0 million in 2023. Home sales were 6.9 million in 2021.
  • Home purchase mortgage originations are expected to increase from 1.9 trillion in 2021 to $2.1 trillion in 2022 and $2.2 trillion in 2023.
  • Refinance originations are expected to continue to soften, declining from $2.7 trillion in 2021 to $1.2 trillion in 2022 and $930 billion in 2023.  
  • Overall, annual mortgage origination levels are expected to be $3.3 trillion in 2022 and $3.1 trillion 2023, down from $4.7 trillion in 2021.