The housing market is expected to "continue to stand firm" as home sales rise to 6.0 million for 2019 before increasing to 6.1 million for 2020 according to Freddie Mac's November Forecast.
“The economy has seen increased volatility in November as hopes for a favorable resolution to the trade dispute have recently waned,” said Sam Khater, Freddie Mac’s Chief Economist. “However, given low interest rates, modest inflation and a solid labor market, the U.S. housing market continues to stand firm, and our forecast is for the housing market to maintain momentum over the next two years.”
Economic growth, though slow, has been propped up largely by housing, according to the Fannie Mae Economic and Strategic Research (ESR) Group. The Group notes that housing should also continue to function as a positive contributor to growth in the near term, as indicated by both new and existing single-family home sales advancing in Q3, as well as pending home sales, permits, and starts. However, persistent supply and affordability constraints continue to hold back household formation, inhibiting housing market activity.
According to Freddie Mac, the average 30-year fixed-rate mortgage rate is forecasted to be 4.0% for the remainder of 2019 and to decrease slightly to 3.8% in 2020. The house price forecast is expected to be 3.2% in 2019 and 2.9% in 2020. Modest increases in home sales and house prices should boost purchase mortgage originations to $1,255 billion and $1,299 billion in 2019 and 2020, respectively.
Freddie Mac adds that the surge in refinance activity will carry over into next year, with a projected $846 billion and $834 billion in single-family refinance mortgage originations in 2019 and 2020, respectively. Overall, annual mortgage origination levels are expected to hit $2.1 trillion in 2019 and 2020.