Home sales seen shrinking in 2020: Freddie Mac forecast

In October Freddie Mac expected 6.1M of new home sales in 2020, on an annualized basis.

Now it doesn't see reaching that level until 2021.

Freddie reduces its sales forecast to 5.1M homes for this year, according to Freddie Mac's Quarterly Forecast.

"Although the uncertainty of the [coronavirus] 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," says Freddie's chief economist, Sam Khater.

The forecast also projects house price growth slowing to an annual rate of 0.4% in 2020 then rising 0.7% in 2021; that's way down from the October 2019 report, which expected 2020 house price growth of 2.8%.

Overall, the forecast expects annual mortgage origination levels to remain at $2.4T in 2020 and 2021; the total number is up from $2.05T that was expected in 2020 as of October 2019.

Purchase originations are seen falling to $1.09T in 2020 and increasing to $1.34T in 2021; refinance originations expected to be $1.26T this year and $1.03T in 2021.

Average 30-year fixed-rate mortgage is expected to be 3.3% in 2020 vs. 3.8% in the October forecast; in 2021, it's expected to slip to 3.1%.