Fannie Mae Housing Forecast Revised For 2020

Fannie Mae is revising its 2020 housing forecast to predict higher than expected because of strong reads on the economy. For 2020, Fannie Mae’s Economic and Strategic Research Group believes the strong labor market, lower mortgage rates and massive consumer spending will prompt builders to build more housing than previously expected.

Because of the shortage of existing homes inventory, many home buyers are now looking for a new build. According to the Mortgage Bankers Association the mortgage applications for a newly built home purchase were up 27% annually this fall. The National Association of Home Builders also reported builder sentiment at it highest level in 20 years this December.

“It will likely take several years, even at a more robust pace, for new construction to address the existing pent-up demand for additional housing, as suggested by a still-increasing share of 25- to 34 year-olds living at home with their parents,” according to the report.

It is predicted that single-family housing will rise to 10% in the year 2020 and will match to 1 million new homes in 2021.

The economy is strong and buyers are itching to buy. Lower rates are boosting buyer’s moral. The average rate on a 30-year fixed mortgage is around 4% which is a full point lower than it was this time last year.

“We now expect single-family housing starts and sales of new homes to increase substantially, aided by a large uptick in new construction as builders work to replenish inventories drawn down by the recent surge in new home sales activity,” said Fannie Mae chief economist Doug Duncan.

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