Fannie Mae used last year's Home Mortgage Disclosure Act data to increase its origination projections for both 2017 and 2018. However its overall economic outlook remained unchanged from September because of the aftermath from Hurricanes Harvey and Irma on housing.

Each year following the release of the HMDA data in September, "we revisit some of our underlying assumptions in the forecast and basically rebenchmark the forecast," said Hamilton Fout, its director of economics.

Even though the HMDA data is from 2016, after examining the information, "we saw as a share of all mortgages outstanding that our assumption for how much of that would refi was too low," Fout said.

But the two hurricanes have become another drag on home sales that had already been depressed because of the inventory shortage.

In the revised forecast, the cut in sales was offset by an increase in expected sale prices and lower expectations regarding the share of cash sales, he said.

In addition, lower-than-expected interest rates in September led to an increase in refinance applications that are likely to close in the fourth quarter, Fout said.

For 2017, Fannie Mae is currently projecting total volume of $1.79 trillion ($1.13 trillion purchase and $662 billion refinance), up from $1.68 trillion ($1.08 trillion purchase and $601 billion refi) in September.

Next year, it expects $1.72 trillion in total volume ($1.18 trillion purchase and $536 billion refi), up from $1.58 trillion ($1.16 trillion purchase and $415 million refi) in last month's outlook.

"While we expect full-year economic growth for 2017 to come in at the same rate projected in our prior forecast, we now believe that total home sales will be essentially flat this year compared with the moderate rise predicted in the prior forecast," Fannie Mae Chief Economist Doug Duncan said in a press release. "Despite muted underlying inflation, we continue to expect the Fed to raise rates for the third time this year in December."

Going into next year, Fannie Mae expects economic growth to moderate to 1.8%. The potential for tax reform is a positive, but on the downside, there is risk from the Trump administration's restrictive trade policy and geopolitical tensions.

"The impacts from this season's hurricanes on the U.S. economy were wide-ranging but should dissipate over time. These include the loss of momentum in consumer spending and residential investment, as well as a decline in September payrolls and August home sales and contract signings," Duncan said.

"We expect economic activity to rebound in coming months. The recovery will likely be slower for home sales and homebuilding, however, as the labor shortage and rising material prices will likely worsen after the hurricanes, exacerbating already-tight inventory."

Corrected October 19, 2017 at 11:37AM: This story has been updated to correct the amounts of Fannie Mae's 2018 purchase and refi origination projections.