May 25, 2018

Fannie Mae More Cautious On Housing Outlook

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Fannie Mae More Cautious On Housing Outlook

Fannie Mae economists have downgraded their housing outlook after a weak end to the second quarter, and they say that near-term indicators are suggesting only a minor improvement in the second half of the year.

"The impact on mortgage rates from the market's expectation that the Federal Reserve would soon start tapering their securities purchases, combined to some degree with the weather effect in the first half of 2014, led to very little seasonal growth in housing," says Doug Duncan, Fannie Mae's chief economist. "In the first six months of the year, total sales have run below last year's pace."

Also, Duncan notes that "on the demand side, there appears to be a conservatism among consumers and their willingness to take on big-ticket purchases, such as homes."

Fannie Mae's Economic & Strategic Research Group estimates that 2014 will finish lower in total sales figures than 2013. They're also predicting that "2015, while stronger than 2013 and 2014, will not be the breakout year some are expecting."

Still, there is some hope for a turnaround: Consumers surveyed in Fannie Mae's July National Housing Survey did report being more optimistic about their personal income and expenses. Also, the economy has shown a slight improvement, with upticks in consumer spending and employment, Fannie researchers note.

Source: Fannie Mae