Fannie and Freddie Believe Housing Will Soar Into 2022
By Kurt Real Estate Oct 19, 2021
As we near the close of 2021 and start looking towards Q1 of 2022, homebuyers are all asking – what will the market look like next year? According to economists at Fannie Mae and Freddie Mac, the housing market will likely remain hot, even as mortgage rates and home prices continue to rise. The GSEs predict continued high levels of buyer demand and growing purchase originations in 2022.
“Even as mortgage rates are expected to increase and home prices continue to rise, homebuyer demand remains steady as inventory issues have slightly improved,” said Sam Khater, Freddie Mac’s chief economist. He expects strong home price growth will raise mortgage originations by more than $500 billion from 2020.
Freddie Mac and Fannie Mae economists predict that home prices will grow by nearly 17% overall for 2021 and then slow to about 7% growth in 2022. They predict the 30-year fixed-rate mortgage—which likely will end the year averaging about 3%—will inch up to 3.5% in 2022.
Fannie Mae economists expect inflation to run higher and suggest that the Fed’s tightening of its monetary policy, first by tapering its asset purchases, will likely impact housing. Still, with a modest tightening of monetary policy the effects would be minimal considering current market conditions. “Mortgage rates may rise in response to the tighter environment, but we expect the severe shortage of homes for sale to remain the primary driver of strong house price appreciation through at least 2022, limiting interest rate effects on home sales and home prices,” says Doug Duncan, Fannie Mae’s chief economist.
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