Home sales will rise modestly next year but won’t really take off until 2012, economists with the Mortgage Bankers Association predict in their latest forecast.
Existing-home sales, which are expected to be about 8 percent lower this year than last, are expected to grow by less than 2 percent next year before increasing by 16 percent in 2012.
New-home sales, which will probably drop 13 percent this year from last, are expected to bottom out in the third quarter of this year and grow by 20 percent in 2011 and 40 percent in 2012.
That, along with a decrease in the share of cash purchases, should drive the dollar volume of purchase mortgage originations up 30 percent in 2011, the MBA said.
Mortgage rates are probably headed up, but may still be below 6 percent in two years, the forecast said. MBA economists expect fixed-rate mortgages to average about 4.4 percent in the fourth quarter of this year, increasing to 5.1 percent by the end of 2011 and reaching 5.7 percent in 2012.
Rising rates could spell the end of the refinancing boom, especially given that many homeowners who are able to refinance have already done so.
The MBA projects refinancings will fall 31 percent this year, to $921 billion, and by 60 percent next year, to about $370 billion. By 2012, refinancings will account for just 26 percent of all mortgage originations, compared to a projected 66 percent this year.
The end of the refinancing boom will only be partially offset by a recovery in purchase lending. By 2012, the MBA expects purchase originations to hit $877 billion, up from a projected $480 billion in 2010.
The Bremner Group at Coldwell Banker
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VIA INMAN NEWS