Sales of U.S. homes are expected to rise in 2021 before falling over the course of the next two years, according to Reuters (subscription).
The rise: Home sales across the United States are expected to end 2021 up 7.1% over the previous year, according to Fannie Mae.
- “The government-sponsored enterprise’s Economic and Strategic Research Group raised its 2021 home sales growth projection from a prior 5.3%, citing an expected strong year-end surge in home buying. A 7.1% increase would be just under 2020’s 7.3% jump.”
The fall: A limited supply of available homes, in combination with rising mortgage rates and elevated prices, are expected to pump the brakes on the housing market over the next two years. The forecast suggests that home sales will fall 1.4% next year and 3.8% in 2023.
The word from Fannie Mae: “The expectation that mortgage rates will continue to drift upward, averaging 3.2% in 2022, coupled with additional home price appreciation are likely to make affordability a growing constraint on home sales in the new year,” Fannie Mae said in a statement.
- Fannie Mae also cited the Fed’s recent moves to combat inflation, saying those actions will “combine with ongoing supply issues and still-appreciating home prices to slow sales activity.”