Each month, Fannie Mae’s Economic and Strategic Research Group releases an outlook covering the housing market and overall economy. The group looks at economic growth and policy, home prices, mortgage rates, and sales expectations. In February, their outlook addresses housing affordability and the likelihood that the market will slow from last year’s frenetic pace. According to the release, they foresee home sales and price increases moderating in 2022. In fact, the group projects home price growth of 7.6 percent this year and 3.3 percent in 2023, down significantly from the double-digit increases seen last year. However, Doug Duncan, Fannie Mae’s senior vice president and chief economist, says there are still some unknowns. “For home buyers, we believe that borrowing costs will likely rise with the increase in mortgage rates,” Duncan says. “What remains unknown is how higher mortgage rates and tighter monetary policy – through expected interest rate hikes and changes to the makeup of the Fed’s portfolio – will impact home prices.” Ultimately, they expect housing activity to be supported by demographic factors and the shortage of homes for sale. (source)
