Freddie Mac Predicts Stable Single-Family Housing Market in 2022

Freddie Mac released its new Quarterly Forecast on Friday (1-21-22). The forecast is from Freddie Mac’s Chief Economist Sam Khater, who is predicting that in spite of mortgage interest rates rising, the single-family housing market in 2022 will remain stable. Khater added that rising rates will lead to moderation in homebuyer demand, slowing house price growth somewhat.

“As mortgage rates rise, we do expect some moderation in housing demand, causing house price growth to temper,” Khater elaborated. “However, the combination of a large number of entry-level homebuyers facing a shortage of entry-level inventory of homes for sale should keep the housing market competitive. In 2022, we expect purchase originations to grow from $1.9 trillion in 2021 to $2.1 trillion in 2022 while refinance activity is anticipated to decrease from $2.7 trillion in 2021 to $1.2 trillion in 2022.”

Other highlights of the forecast include:

• The average 30-year fixed-rate mortgage (FRM) is expected to be 3.6% in 2022 and 3.9% in 2023. In comparison in 2021, the 30-year FRM averaged 3.0%.
• House price growth is expected to be 6.2% in 2022 and slowing to 2.5% in 2023. House price growth was 15.9% in 2021.
• Home sales are expected to be 6.9 million in 2022, increasing to 7.0 million in 2023. Home sales were 6.9 million in 2021.
• Home purchase mortgage originations are expected to increase from 1.9 trillion in 2021 to $2.1 trillion in 2022 and $2.2 trillion in 2023.
• Refinance originations are expected to continue to soften, declining from $2.7 trillion in 2021 to $1.2 trillion in 2022 and $930 billion in 2023.
• Overall, annual mortgage origination levels are expected to be $3.3 trillion in 2022 and $3.1 trillion 2023, down from $4.7 trillion in 2021.