Just last month, Fannie Mae economists forecasted that home sales would grow 6.3 percent in 2021, to 6.868 million homes. Just four weeks later, Inman is reporting that Fannie Mae has modified their forecast to a 4.2 percent—or 6.732 million homes.
Economists with Fannie Mae’s Economic and Strategic Research Group said they have “meaningfully downgraded” their forecast due to the ongoing lack of available listings and a softening pace of new construction due to supply constraints affecting homebuilders, per a monthly statement.
“Strong demand for housing continues to run up against a long-running lack of supply,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “We’ve seen this disconnect lead to rapid house prices gains over this past year, but we believe it will soon reveal itself within inflation measures as well. Demographic factors remain favorable for a strong housing market and many of the supply constraints that homebuilders face are likely to persist in the near term, so this upward pricing pressure is not likely to be as transitory as many of the current inflation drivers.”
Elsewhere in their monthly report, Fannie Mae projects an 11.8 percent increase in new home sales, revised from th previous 16.3 percent growth. The new estimate sits around 919,000 new homes in 2021. Existing single-family homes and condos are now projected to grow by 3.1 percent instead of 4.8 percent as previously projected. That amounts to 5.81 million units.