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economy and home sales both to rebound in 2021. The mortgage giant currently expects the U.S. The good news for prospective home buyers and sellers alike is that the situation in the real-estate market is expected to improve next year, according to Fannie Mae.
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Fannie Mae projects there will be $1.41 trillion in refinance loans originated in 2020, up from $1.01 trillion last year.
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While the downturn in sales is expected to lead to a slower pace of mortgage lending for loans used to purchase homes, refinancing is expected to remain strong throughout the year thanks to the low rate environment. Fannie Mae is still projecting the median price for an existing home to rise to $275,000 in 2020 from $272,000 last year, while the median price for a new home is expected to increase to $326,000 from $321,000. Sellers don’t necessarily need to worry about lower prices if they do put their home on the market, according to Fannie Mae. Would-be home sellers pulling their listings may exacerbate this issue - though buyers in the market might have more luck as a result of the decrease in demand fueled by the flailing job market. In the years following the Great Recession, home-building activity did not keep pace with the creation of households, which has left a significant gap in the marketplace.Īs a results, economists had expected that the low number of homes on the market would prevent buyers from finding a property to purchase that they could afford. While the housing industry was in a strong position at the start of the year, the one thing many economist agreed would curtail growth in sales was the supply of homes. “On the supply side, the number of listings is falling, as those with homes to offer may either be hesitant to allow strangers to tour their home or worry that the lack of demand is placing downward pressure on the sales price they might otherwise receive,” Fannie Mae chief economist Doug Duncan said in the report. Meanwhile, home sellers are pulling their homes from the market. Read more: America’s housing market is showing the first signs of trouble from the coronavirus pandemic On the demand side, the rapid rise in unemployment as a result of the coronavirus pandemic and its accompanying stay-at-home orders will curtail many Americans’ ability to afford a purchase as big as a home. Issues with both supply and demand are expected to contribute to the decline in home-buying activity.