The brunt of the coronavirus' impact on the housing market will hit in the first half of 2020, with a likely recovery and pick up in home sales in the second half, according to Freddie Mac.
"Although the uncertainty of the crisis means forecasts of economic activity are more unclear than usual, we expect that most of the economic damage from the virus will be contained to the first half of the year," Sam Khater, Freddie Mac's chief economist, said in a press release. "Going forward, we should see a recovery starting in the second half of 2020, though it will take some time for the economy to fully bounce back."
Mortgage originations should be slightly lower in 2020, at $2.35 trillion, down from an estimated $2.38 trillion last year. But this is an increase from Freddie Mac's
Freddie Mac predicts $2.36 trillion in total originations for 2021.
Khater forecasts total home sales of 5.1 million in 2020, which is down from 6 million for 2019. But he sees a rebound to 6.1 million in 2021. On a seasonally adjusted annualized basis, home sales will bottom out at 3.4 million in the second quarter before picking up to 5.3 million in the third quarter and 5.7 million in the fourth, according to the report.
All of the
The inventory shortage along with
Still, those factors will cause purchase mortgage originations to fall to $1.1 trillion this year, from $1.3 trillion last year.
The second quarter, which normally is one of the strongest for
Third-quarter purchase volume will be down, but not as sharply, to $325 billion from $369 billion for 2019.
However, refinance volume will be stronger than previously expected because mortgage rates scraped bottom during the first quarter. The latest forecast sees an average of 3.3% for the 30-year fixed-rate mortgage this year, and 3.1% next year.
Freddie Mac now forecasts $1.26 trillion in refinance originations this year, up from $1.09 trillion in 2019. In December, Khater was bearish on his refinance outlook, at that time calling for $650 billion in volume.