In a press release issued on September 21, 2017, Freddie Mac sees that the scarcity in inventory will receive some relief in the form of 1.33 million new housing starts in 2018. It also projects that current market trends will see an increase in purchase mortgage volume, a cooling of refinance activity and continued strong house price growth. 
Outlook Highlights
- With 1.33 million housing starts expected in 2018 (up from 1.22 in 2017), new home sales should be the primary driver of sales in 2018. We expect total home sales (new and existing) to increase about two percent from 2017 to 2018.
- The gradual increase in housing starts and moderate increases in mortgage rates will help to reduce house price growth next year. We forecast U.S. house price growth of 4.9 percent in 2018, compared to a 6.3 percent growth in 2017 through August.
- With mortgage rates up from last summer’s near-record lows, the potential for rate refinances has diminished. This will cause the refinance share of mortgage activity to decline to 25 percent in 2018, down 23 percent since 2016, and the lowest annual refinance share since 1990.
- In July 2016, the 30-year fixed-rate conventional conforming rate refinance potential was about $800 billion. In July 2017, it was down to around $300 billion. However, refinance originations have not fallen as much as our estimate. We estimate that total refinance originations for the first half of 2017 are down only about 48 percent from the first half of 2016.
- Rising home prices have helped existing homeowners increase their home equity. In the second quarter of 2017, the dollar volume of equity cashed out was $15 billion, up $1.2 billion from the first quarter, but down from $19.1 billion in the fourth quarter of 2016. As home prices keep rising, cash out activity is likely to also rise.
“The economic environment remains favorable for housing and mortgage markets. For several years, we have had moderate economic growth of about two percent a year, solid job gains and low mortgage interest rates. We forecast those conditions to persist into next year.”
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