Fannie Mae’s Economic and Strategic Research Group is projecting a steady but noticeably slower remainder of the year when it comes to home sales.
According to the group’s September report, home sales will grow by 3.3 percent this year to 6.68 million homes. That’s a slight increase from last month’s projection of 3.1 percent annual growth.
Supply constraints, the report notes, continue to impede the housing market. Indicators of home sales activity, including purchase mortgage applications and pending home sales, are softening—despite recent sales numbers remaining strong.
Home construction is also being held back by supply problems, and as such the ESR Group downgraded its expectations for fourth quarter new home sales from 846,000 units to 789,000 units.
Also of concern is the potential impact the supply chain disruptions and rising inflation could have on the market beyond 2021. Fannie Mae’s ESR group now projects full-year 2021 real GDP growth to clock in at 5.4 percent, down from its previous forecast of 6.3 percent, anticipating instead that much of the previously projected second-half 2021 growth will take place in 2022.
“Economic growth continues to be held back by supply chain and labor market constraints, both of which we expect to continue well into 2022,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “Further, affordability remains a challenge, even with mortgage rates near historic lows; if the pace of income growth doesn’t keep up with inflation and interest rates rise more than expected, we’d expect housing activity to slow from our current projections.”