It appears that neither rising home prices nor a lack of available inventory can slow down the housing market these days, as a new forecast shows that home sales are still expected to increase this year over last year.
The new forecast comes courtesy of Freddie Mac, which expects home sales to rise from 6.5 million last year to 6.9 million this year. Freddie Mac also expects home sales to remain at this year’s level through 2022.
“As the economy continues to mend, the housing market remains strong even as certain obstacles have begun to slow sales across the country,” said Sam Khater, Freddie Mac’s Chief Economist. “Of note, high house price growth has been buoyed by increased demand due to low mortgage rates, disposable after-tax income that has risen during the current recession and a major shortage of housing supply relative to our population.”
As Khater notes, interest rates are expected to stay low throughout the rest of this year, ending the year around 3.1% before climbing to 3.7% next year.
That increase should drive refinances down from last year’s lofty levels.
According to Freddie Mac’s forecast, refinance originations are expected to decline this year to $2.2 trillion from last year’s $2.6 trillion. The decline will be much more noticeable in 2022, when refinance originations are expected to fall to $713 billion.
Meanwhile, purchase originations are expected to continue rising over last year’s $1.5 trillion. According to Freddie Mac, purchase originations are projected to rise to $1.8 trillion this year and $1.9 trillion in 2022.
Overall, Freddie Mac expects to see $3.9 trillion in mortgage originations this year, down slightly from last year’s $4.1 trillion. That figure is expected to fall to $2.6 trillion in 2022.