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Press Release

U.S. Economy Again Limited by COVID and Supply Chain Concerns

August 19, 2021
Lack of Housing Inventory Continues to Limit Home Purchase Activity

WASHINGTON, DC – The full-year 2021 real GDP growth forecast was revised modestly downward due in part to the expectation that COVID-related disruptions to consumer spending and supply chains will more greatly hinder economic activity in the second half of the year than previously forecast, according to the August 2021 commentary from the Fannie Mae (FNMA/OTCQB) Economic and Strategic Research (ESR) Group. A weaker than previously anticipated second quarter real GDP reading also contributed to the downward revision to the full-year 2021 growth outlook from last month’s 7.0 percent to this month’s 6.3 percent. However, the downgrade was offset partially by an upgraded 2022 growth forecast from 2.8 percent to 3.2 percent. The ESR Group continues to expect inflation, as measured by the Consumer Price Index (CPI), to remain around 5 percent by the end of 2021, as broader inflationary pressure from wage and home price growth replaces some of the more transitory factors driving the recent upward movement. By the end of 2022, the ESR Group forecasts CPI to decelerate meaningfully to a still-elevated level nearer 3 percent.

The ESR Group downgraded its forecast for single-family home sales through the second half of 2021 due to ongoing inventory and supply chain constraints. On a full-year basis, the ESR Group expects total home sales of 6.66 million, down from last month’s projected 6.71 million – which would still represent a 3.1% increase compared to 2020. Due to recent declines in long-term interest rates, the ESR Group projects the refinance share of mortgage origination activity to be 58 percent in 2021, up from a projected 56 percent last month, before falling to 41 percent in 2022. Further, home prices, as measured by the FHFA Purchase-Only Index, are expected to rise 14.8 percent in 2021.

“While the recent surge of COVID-19 cases appears to be affecting consumer behavior, the economic response so far has been modest compared to last year’s outbreak, and its impact on our latest forecast is similarly slight, albeit to the downside,” said Mark Palim, Fannie Mae Vice President and Deputy Chief Economist. “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.”

Visit the Economic & Strategic Research site at to read the full August 2021 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, Housing Forecast, and Multifamily Market Commentary. To receive e-mail updates with other housing market research from Fannie Mae’s Economic & Strategic Research Group, please click here.

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Fannie Mae Newsroom

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Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economic & Strategic Research (ESR) group included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the ESR group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.