Freddie Mac's outlook for the housing market remains highly uncertain, with the forecast for the overall mortgage origination levels to be $2.916 trillion this year before falling to $2.524 trillion next year.
In the past few months, the housing has shown signs of recovery with record-low mortgage rates putting Americans in the home-buying mood. Freddie expects the average the 30-year fixed-rate mortgage to hover at 3.4% in 2020 before edging down to 3.2% in 2021.
"While the housing market undoubtedly has felt the effects of COVID-19, we are encouraged by recent homebuyer demand as well as mortgage rates that should remain at record lows for the foreseeable future." Freddie Mac Chief Economist Sam Khater said.
The GSE's outlook for refinance originations also remains positive. Refinance originations are anticipated to be $1.872 trillion this year before falling to $1.279 trillion next year. Meanwhile, purchase originations will drop to $1.044 trillion in 2020 and increase to $1.244 trillion in 2021, according to the forecast.
2020 annual house price growth rate will also slow down to a 2.3% pace. In 2021, that rate is predicted to be 0.4%. Despite a deceleration in house price growth this year, home sales will decrease to 4.8 million homes in 2020 before increasing to 5.6 million homes in 2021.
"However, beyond the initial rebound in the housing market, the economic and housing outlook will be heavily impacted by the prospects for a vaccine, fiscal policy and the underlying organic recovery of the economy which, in combination, make the outlook highly uncertain," Khater said.