Home Sales, Homebuilding Headed for a Slowdown, Fannie Mae Says

After the biggest surge in mortgage rates in 40 years, houses are now less affordable than they were at the peak of the 2006 housing bubble, which is likely to dent home sales and cool the pace of homebuilding this year, Fannie Mae economists said Thursday.

In their latest economic and housing outlook, Fannie Mae economists said that while mortgage rates may have peaked, they expect a “meaningful slowdown” in home sales for the second and third quarters of 2022, followed by a slowdown in new home construction.

Not until next year do economists with Fannie Mae’s Economic and Strategic Research Group expect to finally see a “a large deceleration in home price growth,” with some regions likely to see price declines. While there’s a chance of a “modest recession” later this year or next, Fannie Mae economists don’t see a downturn of the magnitude of the Great Recession of 2007-09 on the horizon. “Rising mortgage rates are reducing affordability through higher mortgage-related costs, all while house prices continue to grow,” said Fannie Mae Chief Economist Doug Duncan, in a statement. “Historically, rapid and substantial rises in mortgage rates have had the effect of slowing activity, which we reflect in our forecast. Not only is the worsening affordability of homes a problem for potential entry-level homebuyers, but current homeowners are less likely to trade in their existing lower-rate mortgages and list their homes for sale, both of which will likely weigh on sales.”

How can we help? Let’s chat today! 615-796-6081

#BUYMIDDLETN #ANGIEMORRISBROKER #STR #SOUTHERNTRADITION