CONTINUED JOB GROWTH, STABLE INTEREST RATES IN 2021

Key Highlights

  • More than 20 leading economic and housing experts predict GDP growth of 3.5% and an annual unemployment rate of 6.2% in 2021.
  • Housing prices are expected to climb 8.0% next year and 5.5% in 2022, with 30-year fixed mortgage rates of 3.0% and 3.25% for 2021 and 2022, respectively.
  • Dallas-Fort Worth, Atlanta, Phoenix, Indianapolis and Provo-Orem join five other metropolitan areas among NAR’s top 10 real estate markets during and in a post-COVID-19 environment.

Expect the post-pandemic economic rebound, improving job conditions and stable interest rates to continue in 2021, according to a survey of more than 20 top U.S. economic and housing experts. Lawrence Yun, NAR chief economist and senior vice president of research, unveiled the consensus forecast today during NAR’s second annual Real Estate Forecast Summit.

These slides were presented by NAR Chief Economist Lawrence Yun at NAR’s Real Estate Forecast Summit on December 10, 2020.

DOWNLOAD SLIDES

The group of experts predicted:

  • Gross Domestic Product growth of 3.5% in 2021 and 3.0% in 2022;
  • An annual unemployment rate of 6.2% next year with a decline to 5.0% in 2022;
  • Average annual 30-year fixed mortgage rates of 3.0% and 3.25% for 2021 and 2022, respectively;
  • Annual median home prices to increase by 8.0% in 2021 and by 5.5% in 2022;
  • Housing starts of 1.50 million next year and 1.59 million in 2022;
  • The share of the U.S. workforce working from home to be 18% in 2021 – down from 21% in 2020 – and 12% in 2022; and
  • Small declines in office and hotel vacancy rates in 2021, with a slight increase in retail vacancies next year.

When asked if the Federal Open Market Committee will change the federal funds rate in 2021, 90% of the experts surveyed said they expect no change in the current rate of 0%. For 2022, the experts predict a rate increase of 0.25%.

“It is an understatement to say the year 2020 has been filled with challenges and full of surprises,” said Yun. “Yet, one astonishing development has been the hot housing market as consumers eyed record-low mortgage rates and reconsidered what a home should be in a new economy with flexible work-from-home schedules.”

In 2020, home sales will reach 5.52 million, the highest annual mark since 2006, with the median home price setting a record high of $293,000, according to NAR.

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