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According to the outlook, single-family home sales will decline due to ongoing inventory and supply chain constraints. The group’s projected total sales through the rest of the year dropped from last month’s forecasted 6.71 million to 6.66 million – which would still represent a 3.1% increase from 2020.

With interest rates hovering below 3%, Fannie expects the refinance share of mortgage origination activity to be 58% in 2021, up from 56% last month, before falling to 41% in 2022. Additionally, home prices are anticipated to soar 14.8% in 2021.

“For the housing market, at current case levels, the lack of inventories of homes for sale and continued supply chain bottlenecks experienced by homebuilders remain the primary constraints on home purchase activity. Moreover, while mortgage rates have drifted downward and in theory provide greater purchasing power to potential borrowers, in practice, given current supply-side and affordability challenges, we expect that benefit to be limited,” Palim said.