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The National Association of Realtors (NAR) released a 2021 consensus outlook on the economy and housing market at its virtual Real Estate Forecast Summit. The consensus includes predictions from more than 20 economic and housing experts and was presented at the summit by Lawrence Yun, Chief Economist and SVP of Research at NAR.
One of the key takeaways from the consensus outlook is that experts anticipate the economy to begin to rebound from the major disruptions caused by the COVID-19 pandemic this year. Economic experts predict a GDP growth of 3.5% and an annual unemployment rate of 6.2% next year, which is expected to continue dropping to 5.0% by 2022.
“Before the pandemic, America experienced the longest economic expansion ever—10 straight years of job creation,” Yun said. “That was 20 million jobs. But in a single month, we lost all the 10 years of gain in the single month of April,”
Yun explained that a second stimulus package could help Americans heal from these intense job losses and prevent the possibility of another economic recession.
“Without the next stimulus package, we could possibly go into a slight modest recession again,” Yun added. “The stimulus will certainly keep the economy on a positive path until we get the vaccine distribution.”
The 2021 economy outlook also highlighted the impact that remote work may have on future employment. The share of the U.S. workforce working from home is expected to be 18% in 2021, a slight decrease from 21% of remote workers in 2020. This number is expected to drop to 12% by 2022.
While the economy took a major blow this year, the housing market did surprisingly well in 2020. Low mortgage rates drove homebuying activity despite this year presenting major challenges in other industries.
“To our surprise, the housing market not only recovered but then some, roaring past the pre-pandemic activity levels with strong activity,” Yun said.
According to the NAR consensus outlook for 2021, the housing market should continue to do well next year. Housing experts predict that the average annual 30-year fixed mortgage rates in 2021 will be 3.0% and rise slightly to 3.25% in 2022. Annual median home prices should increase by 8.0% in 2021 and by 5.5% the year after.
Yun added: “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.”