07/26/2024 | Press release | Distributed by Public on 07/26/2024 10:46
Helping lenders serve homebuyers and homeowners with affordable mortgages
Financing for quality, affordable rental housing in every market, every day
Reducing risk and enhancing housing finance liquidity
All Resources to Manage Financial Uncertainty
All Resources for Recovering from a Disaster
Recovery Assistance for Homeowners
Recovery Assistance for Renters
Key Takeaways:
GDP grew at a faster rate than both consensus and our expectations, suggesting the economy remains stronger than previously thought. This report presents some upside risk to our growth forecast for the rest of 2024 given that personal consumption growth picked up toward the end of the second quarter, which will benefit the third quarter estimate. Still, real disposable incomes grew at a much slower rate than consumption, so we continue to believe the current pace of spending is likely unsustainable. On the inflation front, we have previously stated that the Fed will likely need several good inflation reports before being confident enough to cut rates, and the PCE inflation report largely fits that bill. While the stronger-than-expected GDP print means the Fed doesn't need to rush into an easing cycle, we think we're still on track for a September rate cut.
Existing home sales were in line with our forecast. Mortgage rates peaked most recently in the beginning of May at 7.22 percent, around when many of these June home sales would have locked in rates. Rates have since dropped 44 basis points to 6.78 percent as of the most recent reading, which is supportive of our forecast for a gradual increase in home sales through the end of the year. New sales, considering upward revisions to prior months, were a bit above our second quarter forecast. Despite the small forecast beat, we continue to think the new home market has slowed as evidenced by still-increasing inventories of homes available for sale. As such, we continue to see near-term headwinds for the new home market but view the intermediate- to longer-term outlook as more robust given strong homebuilder balance sheets and a nationwide shortage of housing.
Nathaniel Drake
Economic and Strategic Research Group
July 26, 2024
Opinions, analyses, estimates, forecasts, beliefs, and other views of Fannie Mae's Economic & Strategic Research (ESR) Group included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, beliefs, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, beliefs, and other views published by the ESR Group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.