What Slowdown? Freddie Mac Expects Housing Market to Remain Strong For 2021
It predicts housing price growth to be 12.1% this year, up from 11.3% in 2020.
There have been a few signs that the frenzy in the home sales market is showing signs of abating, but a recent report by Freddie Mac promises that it will remain strong for some time to come.
The GSE predicts housing price growth to be 12.1% this year, up from 11.3% in 2020.
Sales are anticipated to reach 6.9 million this year, compared to 6.5 million the year before with purchase origination rising to $1.8 trillion from $1.5 trillion.
“The low mortgage rates that have supported the housing market throughout the pandemic are expected to increase later in the year, but just gradually,” said the latest quarterly report from the GSE.
In addition to low mortgage rates, the market is being propelled by disposable after-tax income that has risen during the current recession and a major shortage of housing supply relative to the population, Sam Khater, Freddie Mac’s Chief Economist stressed. However, he said Freddie expects refinance activity to decline next year as mortgage rates rise with total originations dropping to $2.6 trillion in 2022 to an anticipated to be $3.9 trillion this year.
Estimates for housing price increases range across the board, depending on the source and how they are evaluating the market.
Fitch Ratings recently said that it expects US home prices could rise 8%-10% in 2021.
In a more nuanced analysis, Redfin has found that home prices in car-dependent areas have risen twice as fast as those in transit-accessible areas since the start of the pandemic.
In car-dependent areas nationwide, the median home-sale price has increased 32.8% to a record $418,100 since January 2020. In transit-accessible regions, it has risen 15.6% to a record $540,500 during the same time period.
Redfin attributes some of the growth in prices to the rise of remote work.
Frank Martell, president and CEO of CoreLogic, has said he expects price rises to continue, which could very well push prospective buyers out of the market in many areas which in turn could slow home price growth over the next year.