Mortgage originations will reach $2 trillion in 2019 driven by a surge of homeowners refinancing into a lower mortgage rate along with strong homebuyer demand, Freddie Mac predicts in its most recent economic forecast.
However, the firm is anticipating that total mortgage origination volume will fall slightly in 2020 to $1.8 trillion.
Home sales are forecast to reach a pace of 5.94 million this year before increasing to 6.04 million in 2020.
However, Freddie Mac is not expecting home builders to significantly ramp up production – the firm is predicting that single-family housing starts will decrease slightly this year to 870,000 and will reach 940,000 in 2020.
As far as home prices go, Freddie Mac is sticking with its current projection: Home prices will rise an average of 3.4% in 2019.
The firm is forecasting GDP growth of 2.2%, with trade tensions likely having a visible impact on the second half of the year.
“Despite fears of an economic slowdown, the U.S. labor market stands firm,” says Sam Khater, chief economist for Freddie Mac, in a statement. “Specifically, jobless claims are near historic lows. This strong labor market, along with mortgage rates at three-year lows and consumer confidence holding strong, will set the stage for continued improvement in the housing market heading into the fall.”