Fannie Mae ‘Meaningfully Downgrades’ 2021 Home Sales Forecast
Citing new-home supply problems and tight inventory, Fannie’s latest forecast calls for a 4.2% uptick in 2021 home sales – a cut from 6.3% predicted a month ago.
WASHINGTON – Fannie Mae decided this month that listings shortages and constraints on home builders hurt home sales and push up home prices and rents. It says the situation could fuel inflation and compel the Federal Reserve to adopt a more aggressive monetary policy stance, according to the latest monthly forecast by economists with Fannie Mae’s Economic and Strategic Research Group.
The economists say they “meaningfully downgraded” their forecast for second- and third-quarter home sales, “largely due to the ongoing lack of available listings and a softening pace of new construction due to supply constraints affecting home builders.”
In May, they predicted that home sales would rise by 6.3% in 2021 to 6.868 million homes, but they now forecast that 2021 sales will grow by a more modest 4.2% to 6.732 million. Recent declines in pending home sales and purchase mortgage applications “have been more pronounced than we previously expected,” Fannie Mae researchers say.
Rather than 16.3% growth in new home sales, Fannie Mae now estimates that builders will sell 919,000 new homes in 2021, up 11.8% from a year ago. Sales of existing single-family homes, condos, and co-ops are now predicted to grow by 3.1% to 5.81 million, instead of 4.8% as projected in May.
Fannie Mae also anticipates that single-family housing starts will fall by 3.7% next year to 1.15 million because of labor scarcity and a lack of buildable lots.
In addition, Fannie Mae isn’t expecting a notable increase in listings after the foreclosure moratorium ends, “in part due to large gains in homeowner equity this past year – but we anticipate some homes will be put on the market for sale.”
Source: Inman (06/16/21) Carter, Matt