Current housing market dynamics continue to be fueled by a shortage of existing homes available for sale, a trend that did not improve during the spring home buying season, when more homes are typically placed on the market. it has led fannie mae To reduce its 2023 single-family income forecast from $1.65 trillion to $1.59 trillion.
Thank you for reading this post, don't forget to subscribe!This lack of inventory has resulted in an increase in home prices in recent months and spurred new home construction. fannie maeThe Economic and Strategic Research (ESR) Group of the
While the mortgage rate lock-in effect suppressed the flow of new listings for most of 2022, a slowing of sales led to a build-up of active inventory for sale and a modest decline in national home prices in late 2022. ESR Group explained.
Single-family housing starts rose 18.5% in May to a seasonally adjusted annual rate of 997,000 units.
Single-family housing permits, which are more indicative of the underlying trend, also rose, but by less than 4.8% and to a seasonally-adjusted annual rate of 897,000 units, well below the pace of starts.
Still, permits data point to a clear upward trend in recent months, and this has coincided with an improvement in homebuilder sentiment. Homebuilders’ confidence slips into positive territory for the first time in nearly a year amid recent data US Census Bureau It was learned that about 1.69 million single-family and multi-family housing units were under construction nationwide in May, which is close to the highest level recorded in the past 50 years.
Fannie Mae’s ESR Group forecast that without a macroeconomic downturn, current home prices and current inventory shortages would lead to more homebuilding.
Senior Vice President and Chief Economist Doug Duncan pointed out that the “sudden and significant magnitude” in mortgage rates is showing a stronger increase in housing prices than previously thought.
According to Duncan, homebuilders continue to increase supply given historically low inventory levels, but years of meager homebuilding in the past business cycle mean that the imbalance will continue for some time.
ESR Group estimates single-family mortgage originations for 2023 will be $1.59 trillion, down from its previous forecast of $1.65 trillion. In 2024, total single-family homes are projected to generate approximately $1.90 trillion, down from the previous forecast of $2.03 trillion.
Fannie Mae reiterated that an economic downturn remains a question of “when” rather than “if”.
ESR Group expects a slight slowdown in the fourth quarter of 2023, moving away from last month’s forecast for the beginning of the second half of the year.
“We expect housing to support the overall economy as it exits the mild recession,” Duncan said.
The good news is that continued resilience in employment, strong housing demand and current financial conditions do not point to an immediate recession.
Fannie Mae cut its 2023 GDP forecast to 0.1% from -0.3% on a Q4/Q4 basis, while it cut its 2024 GDP forecast to 0.8% from 1.2%.
