Freddie Mac's end-of-the-month forecast for October was exceptionally brief, perhaps in recognition that it has all been said before.  The economy is strong but slowing, the labor market is tight and so is the housing inventory. Instead, Freddie's Economic and Housing Research Team concentrates their commentary on areas they might see as a little less static.

Interest rates for example. They call September "the most volatile month for mortgage rates since the beginning of 2018." An average September week featured an 11-basis point shift in the 30-year fixed-rate.  The volatility had several causes. The outlook for resolving the trade dispute between the United States and China shifted constantly, sometimes day-by-day, sometimes hour-by-hour.  This instability fed into the financial markets and the 10-year Treasury yield. And the end of September didn't end the volatility.  The report notes that during the second week of October the 10-year Treasury yield increased by nearly 25 basis points from Monday to Friday.

While the unemployment rate in September was the lowest since December 1969 at 3.5 percent, Freddie Mac's economists say the risks to retaining that level have recently increased.  The weakness in manufacturing is worsening; the ISM Manufacturing Index is the lowest in over a decade.

Not all the recent economic movements portend future bad news.  Recent statistical releases have been positive for the housing market.  The months reports on August housing starts, building permits, existing  and new home sales reports all significantly outperformed their consensus forecasts.

With low mortgage rates there has, of course, been a surge in refinancing and Freddie Mac expects that will continue into the new year.  They estimate refinance originations will total $789 billion in 2019 and will hardly miss a beat in 2020, coming in at $785 billion.  There will be "modest" increases in home sales and along with "modest" home price increases, will boost purchase mortgage originations to $1.2 trillion and $1.3 trillion in 2019 and 2020, respectively. Overall, expect annual mortgage origination levels of $2.0 trillion in 2019 and $2.1 trillion in 2020.  This is a revision from their forecast last month of $2.1 trillion and $1.8 trillion for the two periods.

Freddie Mac has tweaked some of their housing related forecasts over the past month, but they are largely unchanged. They predict that the 30-year mortgage rate will average 3.7 percent for the remainder of 2019, resulting in an average of 4.0 for the year.  They continue to expect a slight uptick to 3.8 percent in 2020.  Home sales, new and existing, will total 6.0 million this year and then increase to 6.1  million for 2020.  Total sales across the two years have not changed since last month, but 200,000 of the sales they forecasted for 2020 have now been moved forward into this year.  Home prices are expected to rise 3.3 percent this year and 2.8 percent the next.