Single-family mortgage originations are expected to increase 2.1% to $1.68 trillion in 2019 and remain at a similar volume in 2020, according to Freddie Mac’s most recent economic forecast.
Buoyed by lower mortgage rates, total existing-home sales are forecast to slowly regain momentum, increasing to 6.10 million in 2019 and to 6.12 million in 2020.
Home prices are forecast to increase 4.1% this year, but only 2.8% in 2020, as home price appreciation slows.
Total housing starts will reach 1.29 million, Freddie Mac predicts, and will rise to 1.36 million units in 2020. However, this is well below long-run demand.
Looking at the other macro-economic indicators, GDP growth is forecast to decelerate to 2.5% in 2019 and 1.8% in 2020 as the economy settles in to near longer-term potential growth of under 2% per year.
The job market will continue to improve: Freddie Mac forecasts that the unemployment rate will drop to 3.6% before returning to a more sustainable long-term rate of 3.9% in 2020.
“We expect single-family mortgage originations to increase 2.6 percent to $1.69 trillion in 2019 and remain around that level in 2020,” says Sam Khater, chief economist for Freddie Mac, in a statement. “With mortgage rates easing up since the end of 2018, we revised up our forecast of the refinance share of originations to 27 percent and 24 percent in 2019 and 2020, respectively.”