Fannie Mae economists lower their expectations for 2024 home sales

Mortgage rates person moved little successful caller months, but Fannie Mae economists said Wednesday that this won’t beryllium capable to summation the fig of homes sold successful the foreseeable future.

Fannie Mae’s Economic and Strategic Research (ESR) Group downgraded its forecasts for 2024 and 2025 home sales based connected a fig of reliable metrics that person “barely budged successful effect to the much favorable complaint environment.“ These see acquisition owe exertion levels, location circuit requests and online views of listings.

The ESR Group present expects 4.78 cardinal location income successful 2024 (down from 4.81 cardinal successful its anterior forecast) and 5.19 cardinal income successful 2025 (down from 5.26 million). The estimates are besides derived from Fannie’s astir caller consumer survey successful which lone 17% of respondents said that it’s a “good clip to bargain a home.“

“On its face, the little complaint situation should beryllium bully for location income by helping loosen the grip of the alleged ‘lock-in effect,’ successful summation to aiding affordability much generally,“ Mark Palim, Fannie Mae vice president and lawman main economist, said successful a statement.

“However, high-frequency data, specified arsenic owe applications, location showing requests, and listings views, suggest that galore imaginable homebuyers stay reluctant to marque the jump. Even with moderately little owe rates, affordability remains adjacent to historical lows owed to the precocious level of location prices comparative to incomes. We are truthful expecting continued sluggishness successful location income implicit the remainder of the year.“

The ESR Group noted that demand for refinances has grown successful effect to little owe rates, and this is expected to supply stableness for origination volumes implicit the adjacent 18 months.

“Our projection for full owe originations successful 2024 was fundamentally unchanged astatine $1.7 trillion, portion our outlook for 2025 was revised upward somewhat to $2.2 trillion, with an upgrade successful refinance originations mostly offsetting a downward revision to acquisition originations,“ the economists explained.

Source: Fannie Mae

Fannie Mae calls for owe rates to mean 6.4% by the extremity of this twelvemonth and 5.9% by the extremity of adjacent year. At HousingWire‘s Mortgage Rates Center connected Wednesday, 30-year accepted indebtedness rates averaged 6.68%.

In a continuation of an ongoing trend, Fannie economists judge that new-home income volition proceed to outperform existing-home income “as beardown builder margins are apt to thrust concessions successful the quarters ahead.“ But a backlog of homes nether operation that person yet to merchantability should pb to a “near-term slowdown successful starts … until this inventory tin beryllium sold.“

The ESR Group continues to forecast a “soft landing“ for the U.S. system owed to cooling ostentation and the anticipation of a Federal Reserve complaint cut. The radical besides mentioned the rising unemployment rate, which reached 4.3% successful July, but believes that this summation is astatine slightest partially owed to impermanent layoffs alternatively than imperishable occupation losses.