As U.S. home sales are projected to climb in 2020, Freddie Mac’s December Forecast indicates the housing market will continue to stand firm moving into the new year.
According to the government-sponsored enterprise, home sales are expected to increase from 6 million in 2019 to 6.2 million in 2020 and, as much as 6.3 million in 2021.
“A more accommodative monetary policy stance and robust labor market helped the U.S. housing market regain its footing in 2019,” said Sam Khater, Freddie Mac’s chief economist. “Improved sentiment, lower financial market volatility, and trade headwinds are setting up a favorable economic environment for continued real estate market growth in 2020.”
Freddie Mac expects annual mortgage origination levels of $2 trillion in 2020 and $1.9 trillion in the year following.
This year, the U.S. homeownership rate, which climbed to a four-year high, was championed by America’s relatively low mortgage rates. In 2020, the GSE expects this growth to remain on par, as the average 30-year fixed-rate mortgage is now forecasted to remain below 4%, coming in at 3.8% both next year and 2021.
“Modest increases in home sales and house prices will boost purchase mortgage originations for the foreseeable future,” the GSE writes.
Although the housing market experienced a spike in refinance volume in 2019, the GSE believes refinance originations will decline in 2020.
“The low mortgage rate environment led to a surge in refinance mortgage originations. However, as mortgage rates hold steady, we will likely see refinance originations begin to slow next year,” the GSE writes.
According to Freddie Mac, refinance originations will come in at $846 billion in 2019 before slowing to $650 billion in 2020, then retreating to $475 billion in 2021.