Freddie Mac forecasts that 2014 will mark the conclusion of the refinance boom and the beginning of a market dominated by purchase money lending - the first such market in 14 years.
"With mortgage rates rising, we're going to see the home-sales gains as well as the impressive house price growth begin to moderate to more sustainable levels," said Frank Nothaft, Freddie's chief economist.
Interest rates are expected to climb gradually throughout 2014, possibly reaching 5 percent by year's end. Most areas are expected to remain affordable, though, helping to sustain the national market.
Housing construction is projected to rise 20 percent to 25 percent in 2014, with housing starts growing to a pace of 1.15 million. Home values climbed nearly 14 percent this year, and next year, Freddie Mac expects the increase to be in the range of 5 percent to 6 percent.
Finally, Freddie expects a "continued renaissance" in multifamily housing investments as they become increasingly attractive, Nothaft said.