Housing Market to Remain Sluggish Even if US Avoids Recession.
August 25, 2023: According to a new forecast, the housing market is likely to remain sluggish for a long time, even if the US avoids a recession.
The government-sponsored mortgage lender expects home sales to decline by 10% in 2023 and another 5% in 2024. The median home price is also expected to decrease by 5% in 2023 and another 3% in 2024.
Fannie Mae’s forecast is based on several factors, including rising interest rates, which have made borrowing money to buy a home more expensive. The war in Ukraine is also expected to weigh on the housing market, causing higher inflation and uncertainty in the economy.
“Even if the US avoids a recession, the housing market is likely to remain sluggish for some time,” said Doug Duncan, chief economist at Fannie Mae. “Rising interest rates and other headwinds will continue to weigh on demand while supply remains constrained.”
- Buyers should be prepared for a competitive market and rising prices.
- Sellers should be patient and realistic about their expectations.
- Investors should consider other asset classes, such as stocks or bonds.
- The housing market is a significant driver of the US economy, so its slowdown will likely have a ripple effect. Businesses that rely on housing construction or sales, such as furniture stores and home improvement retailers, will likely be affected.
The Federal Reserve is expected to continue raising interest rates to combat inflation. This will likely put further pressure on the housing market, but it is also necessary to prevent inflation from getting out of control.
The housing market is a complex system, and it is difficult to predict how it will evolve. However, Fannie Mae’s forecast suggests that the market will likely remain sluggish for some time, even if the US avoids a recession.