Fannie Mae predicts the housing shortage is going to get much worse

Home price appreciation has outstripped wage growth for years, raising the price of an entry-level home beyond of the reach of a growing segment of the population. Organizations including the government-sponsored mortgage company Freddie Mac have pinned the blame on a lack of supply: cities have failed to add enough housing stock for their swelling populations.

Now, Fannie Mae predicts the housing shortage is going to get much worse.

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In its most recent housing forecast, the company predicted the United States will start construction on 90,000 fewer single-family homes in 2020 than in 2019, a decrease of more than 10 percent, and that building won’t recover until at least 2022.

That shortage could keep home prices high, although the likely recession has markedly slowed price growth. Fannie Mae forecasts the average home price will increase 0.4 percent in the fourth quarter of 2020 from the year before. For comparison, the average home price rose 5.1 percent in the fourth quarter of 2019 from the year before.