Higher mortgage rates aren’t just taking a toll on today’s current sales market, as economists with Fannie Mae predicting a bigger home sales downfall than expected for the year.
The lender has released revised expectations for both 2022 and 2023, with sales anticipated to slump following the highs of the past two years.
According to the new numbers, economists now predict home sales will fall 13.5 percent in 2022. Just last month, Fannie Mae adjusted sales expectations to reflect a 11.1 percent drop in 2022. At the top of this year, economists at Fannie Mae theorized that the U.S. would see just a 1.2 percent decrease in home sales.
Looking even further ahead, Fannie Mae now predicts home sales will fall 11.2 percent in 2023, to 5.29 million units. That is down from May’s forecast of 5.42 million sales for 2023.
“Our view continues to be that the magnitude of response required of monetary and fiscal tightening to return inflation to the Federal Reserve’s target will likely result in a recession, which we currently expect will be modest and occur next year,” said Fannie Mae Chief Economist Doug Duncan. “Notably, the recent market response to continued heightened inflation suggests that the predicted recession could occur sooner and be deeper than our current baseline forecast.”