Fannie Mae ups origination estimate, citing stronger new-home data

Projections for mortgage volume are looking a little higher in light of renewed strength in some housing numbers, Fannie Mae reported Friday.

The government sponsored enterprise’s latest forecast now calls for a nearly $4 trillion year for 2021, up from the $3.93 trillion estimated last month, due to an uptick in projected gains in the spring buying season from the new-home market, where starts have staged a sharp rebound.

The increase in the second-quarter estimate to almost $1.15 trillion from nearly $1.1 trillion suggests that despite a temporary uptick in rates that has quelled some application activity, this fiscal period’s originations could be slightly better than last year’s rather than roughly equal.

“Despite the recent increases, mortgage rates remain near historical lows, which we expect will help maintain strong housing demand in 2021,” Fannie Mae Chief Economist Doug Duncan said in a press release.

Fannie revised its purchase origination estimate for 2Q21 to $539 billion from $514 billion, and its refinance projection to $607 billion from $583 billion due to the increased optimism related to new-home supply and rates, respectively.

While Fannie’s forecast suggests the outlook has improved in the short-term, its projection for 2021 remains lower than 2020’s record-setting $4.5 trillion because the economic team at the government-sponsored enterprise thinks relatively higher rates and limited home supply will be constraints this year.

Although Fannie Mae made that upward revision to new-home projections, it also made a smaller downward change to its resale numbers in the latest forecast.

Also, some other industry forecasts suggest volumes could be lower this year than Fannie projects. For example, Freddie Mac recently estimated that originations would total $3.48 trillion in 2021.