Mortgage origination volume is now expected to grow in 2016 versus the prior year, according to the Economic and Housing Outlook for July from Fannie Mae.
Origination volume is forecast to reach $1.75 trillion in 2016, a 2.2% increase from the year before, Fannie Mae said Tuesday. Previously, the government-sponsored enterprise predicted a 2.8% drop in origination volume.
"We still expect moderate housing expansion for 2016," Fannie Mae chief economist Doug Duncan said in a news release.
"While new-home sales have pulled back from their expansion-best, existing-home sales rose to the highest level in more than nine years amid the largest year-over-year drop in for-sale inventory since October of 2015. Without relief from new construction, housing inventory will likely remain tight, boosting home prices and constraining affordability."
Duncan also predicted a "low for long" trend for interest rates. He said that a Federal Reserve interest rate hike likely won't come until June 2017 as a result of global economic trends including the fallout from the Brexit vote creating financial volatility.
"Brexit's economic impact on the U.S. will likely be limited, especially from a trade perspective, and should be a near-term positive for the housing and mortgage market as falling mortgage rates have prompted new refinance demand," Duncan said.
