August 29, 2023: The housing market will remain sluggish even if the US avoids a recession.
The government-sponsored mortgage lender expects home prices to rise 5.4% this year and 3.6% in 2023. That would be a slowdown from the 20% appreciation seen in 2021.
Fannie Mae said the housing market is being weighed down by rising mortgage rates, making buying a home more expensive. The average 30-year fixed-rate mortgage is now at 5.5%, the highest since 2009.
The Federal Reserve is expected to continue raising interest rates to combat inflation. This could lead to even higher mortgage rates, further dampening home demand.
Fannie Mae said the ongoing labor shortage also affects the housing market. This makes it difficult for builders to complete homes, increasing prices.
Despite the challenges, Fannie Mae expects the housing market to remain stable in the coming months. The lender said there is still a strong demand for homes, and the supply of homes for sale is limited.
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