Fannie Mae’s Economic & Strategic Research (ESR) Group writes that it expects 2022 to be a year “of transition for both the economy and the housing market.” While it hedges its bet as to whether COVID-19 will end any time soon, it expects the market and policy choices driven by the pandemic to be gradually be replaced by more typical pre-COVID economic and housing patterns. This won’t happen overnight, and the group says the changes may never be completely reversed. Alterations to work, school, and housing arrangements may prove to be long-lasting and even though inflation is expected to slow, it may remain higher than the pre-COVID range for the foreseeable future. That said, this month’s economic commentary from the ESR describes the year ahead as ‘returning to a ‘new’ normal.” With unemployment below 4 percent and the Federal reserve expected to increase rates starting in March, the economy appears to be entering the mature stage of the business cycle, during which growth decelerates toward the long-run trend. Labor demand and the need to rebuild inventories should mean solid economic growth in 2022, but the period of rapid recovery has passed. The group expects improvement to supply chain difficulties , but risks around how fast this occurs, the duration of continued high inflation, and policy maker and financial market reactions to these economic conditions remain. Recent economic forecasts from Fannie Mae have been notable for many revisions to economic and housing predictions, usually moving the metrics higher. January’s report, they say, contains only modest changes. GPA growth in 2021 is still expected to be 5.5 percent, the highest since 1984, but the growth this year has been lowered 0.1 point to 3.1 percent with 2023 still expected at 2.2 percent. Recent inflation data has likewise been in line with the prior forecast, so related adjustments have also been modest.