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The housing market outlook is bleak next year and is expected to recover in 2024-2022.
Fannie Mae’s Economic and Strategic Research (ESR) team expects single-family home sales to reach 5.67 million in 2022, decline to 4.42 million in 2023, and then increase to 5.25 million in 2024.
The latest forecasts also suggest that total mortgage origination activity will increase slightly to $2.34 trillion in 2022.
However, the mortgage market is expected to decline to $1.74 trillion in 2023 and grow to $2.11 trillion next year, according to the government. sponsor company.
The impact of Fannie Mae’s November rate hike on home sales has yet to be felt. As interest rates rise, this will affect homebuyers who face affordability challenges.
There is a growing “lock-in effect,” a financial incentive for existing homeowners with fixed-rate mortgages that are well below current market rates to put their home on the market, move, and accept a new higher mortgage rate big impact general housing sales.
In October, more than 80% of existing borrowers had mortgages that were at least 200 basis points below current market rates, and more than 90% had mortgages that were at least 100 basis points below current market rates. market, the highest percentage since at least 2000. , it said. .
Existing home sales fell 5.9 percent in October to an annual rate of 4.43 million, according to the National Association of Realtors (NAR). Also, sales were down 28.4% compared to the same period last year.
Meanwhile, the inventory of unsold homes in October fell for three consecutive months to 1.22 million units.
The lock-in effect, on the other hand, means more first-home buyers will move into new homes over the next few years as previous owners put their homes on the market, Fannie Mae said.
“Given this, housing builders have a small number of mobile buyers so they can pay more attention to relatively simple product proposals.”
Doug Doughan, Chief Vice President and Economist of Demography suggests that it is more likely to be able to expect the economy to be out of a short recession because demography is suitable for housing.
GSE involves interest rates on mortgage loans and interest rates in the next two years, as a result of 10 years of financial cultivation, because interest rates are stabilized. After all, the power supply is provided.
Fannie Mae expects annual real GDP growth to reach 2% in 2024, marking the start of a recovery from a forecast of 0.6% in 2023.
The economy is expected to recover in the first quarter of 2023, turning is in a slight recession. Global GDP growth in 2022 is now expected to be 0%, up 0.1 percentage points from previous forecasts.
Reference Source: Housing Wire
