CHICAGO (Reuters) – U.S. home sales are expected to end 2021 up 7.1% but are expected to decline over the next two years as limited supply, as well as rising mortgage rates and prices , are cooling the residential real estate market, Fannie Mae said on Monday.
The government-sponsored firm’s Economics and Strategy Research Group has raised its home sales growth projection for 2021 from 5.3% previously, citing an expected surge in year-end home purchases. . A 7.1% increase would be just below the 7.3% jump of 2020.
However, forecasts pointed to a 1.4% drop in home sales next year due to limited listings and other factors, and a 3.8% decline in 2023.
“The expectation that mortgage rates will continue to climb, averaging 3.2% in 2022, coupled with further home price appreciation, should make affordability a growing constraint on home sales over the next the new year,” Fannie Mae said in a statement.
He added that moves by the US Federal Reserve to tighten monetary policy to fight inflation “will combine with ongoing supply issues and continued appreciation in home prices to dampen sales activity.” .
(Reporting by Karen Pierog; editing by Jonathan Oatis)
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