Despite challenges, the housing markets remain on track for their best year in a decade by a variety of measures. Let's recap the major trends in the U.S. economy, housing and mortgage markets in 2017:
Modest economic growth, robust job gains, and low interest rates make for a favorable economic environment for housing and mortgage markets. But despite the favorable environment, housing markets have stalled a bit through summer and into fall. A lack of available for–sale inventory is helping to contribute to an acceleration in home prices.
Mortgage originations: Bolstered by low interest rates, single–family mortgage origination volume has held up better than expected. Low mortgage rates helped refinance volumes exceed expectations. Nevertheless, as we documented in September of this year, mortgage rates don't have to increase much to dampen refinance activity. Through the first three quarters of 2017, refinance originations are down 35 percent from last year's pace. Purchase activity has partially offset the decline, but for the full year, we forecast volume to decline about 15 percent from 2016's level. For more on the mortgage market, see our September 2017 Outlook.
It's unlikely the economic environment will be as favorable for housing and mortgage markets than it currently is. Current low mortgage rates offer monthly mortgage payments that are more affordable than at almost any time in history.
Read our November Outlook for further examination of future markets.