Though sales of existing homes may experience a fender dent in 2022 due to rising mortgage rates and high home prices, new home sales are expected to compensate.

Mortgage Bankers Association Modifies Its Forecast for 2022

The Mortgage Bankers Association has revised its 2022 forecast to reflect its latest data from its Weekly Applications Survey.  This data “…has shown lower than expected purchase activity for this time of year.  As a result, we lowered our forecast for new and existing home sales for the forecast period, with existing home sales now expected to slightly decline in 2022.”

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Even with this qualification, the MBA is expecting high home prices to drive a record $1.72T in purchase mortgage originations this year.

Growth in New Home Sales Expected to Pick Up Slack from Drop in Existing Home Sales

The MBA is forecasting existing home sales to slide by less than -1% in 2022 to 6.103M.  Meanwhile, the MBA is forecasting new home sales to increase +7% to 822,000 in 2022.

MBA forecasters said, “A healthy job market, and demographic drivers such as a large cohort of younger home buyers, are still supportive of housing demand, but that is being constrained by low inventory and affordability challenges.”  Such affordability challenges translate specifically into high home prices and rising mortgage rates.

MBA’s Projected Home Sales (millions)

2021: Existing Homes – 6.127M             New Homes – 0.771M

2022: Existing Homes – 6.103M             New Homes – 0.822M

2023: Existing Homes – 6.213M             New Homes – 0.909M

2024: Existing Homes – 6.435M             New Homes – 0.918M

Projected Purchase Loan Volume for Next Three Years

As the median price of an existing home is expected to rise +6% in 2022 to $365,100, the MBA anticipates that lenders will see purchase loan originations growing by +4% this year to a new all-time high of $1.72T.

On the refinance side of mortgage originations, refinancing is projected to drop -64% this year due to rising mortgage rates.  In fact, according to Black Knight, 90% of all properties currently have interest rates that are below the rates currently being offered by lenders and one-third of all properties have rates that are a full -2% below what is available via refinancing.

Adding together both purchase loan originations and refinance originations, the MBA is expecting total mortgage volume to drop -35% in 2022 to $2.58T.

The MBA forecasters expect purchase loans to grow and set new records in 2023 and 2024 while they don’t see refinancing rebounding until 2024.

Simultaneously, MBA forecasters expect mortgage rates to flatten and remain at 4.8% through 2022 and to slightly come down to 4.6% by Q4 2023.

MBA Projections on Mortgage Originations ($ trillions)

2021: Refinance – $2.345T            Purchase – $1.646T

2022: Refinance – $0.841T            Purchase – $1.721T

2023: Refinance – $0.676T            Purchase – $1.773T

2024: Refinance – $0.746T            Purchase – $1.845T

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