04/30/2021 | Press release | Distributed by Public on 04/30/2021 10:51
The March drop in existing home sales was expected and modestly less than we had forecast. Although tight supply contributed to the muted existing sales number (a trend that we project will continue over the next year), the magnitude of March's decline was likely due to February's unusually cold weather. Existing home sales are recorded at the time of closing, while new home sales are recorded at the time of contract. We therefore expect existing home sales to rebound slightly in April, following new home sales' expected March bounce back. New home sales rose above a million annualized units in March, only the second time they have exceeded that mark since 2006. At the moment, builders seem able to pass rising input costs onto homebuyers as the supply of homes remains tight. As long as homebuilders can keep up with buyer demand, we expect new home sales to remain strong in the near term due to the limited existing supply and low mortgage rates. Freddie Mac's 30-year fixed mortgage rate continued its downward trend this week, falling 7 basis points to 2.97 percent and declining to below 3.0 percent for the first time since late February. Unsurprisingly, given the recent pullback in mortgage rates, refinance applications snapped back from 10 weeks of declining or flat numbers; however, we still expect annual refinance originations to pull back significantly from 2020 levels.
Economic and Strategic Research Group
April 30, 2021
Opinions, analyses, estimates, forecasts and other views of Fannie Mae's Economic and Strategic Research (ESR) Group included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR group bases its opinions, analyses, estimates, forecasts and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts and other views published by the ESR group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.