28/06/2024 | Press release | Distributed by Public on 29/06/2024 00:40
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:
First quarter GDP growth was revised upward slightly but the more important story is another large downward revision to personal consumption expenditures. We have long noted that recent strength in personal consumption had not been supported by real income growth, and we therefore expected that the consumer would eventually need to retrench to a more normal saving rate. While May income and spending data was more encouraging, downward revisions to prior months means we are likely to revise downward our second quarter consumption forecast. On the inflation front, core PCE, the Fed's preferred inflation gauge, was a bit below our expectations. While we believe the Fed will likely need several months of reports like this one before being confident that inflation is sustainably returning to target, as of this writing, market pricing has shifted closer to two cuts this year rather than one.
The sharp decline in new home sales in May is better than it looks on its face given the large upward revision to April's data; in fact, the average of new sales in April and May is modestly above our second quarter forecast. Still, inventories of new homes available for sale remain high, suggesting demand has likely softened. While we note that the new home sales data is volatile, we think the current momentum is probably downward, posing some risk to our intermediate-term forecast. Additionally, another decline in the pending home sales index suggests that existing home sales may have a bit further to fall in the next one to two months, especially given a relatively flat reading for sales in May when the pending home sales index fell more than 7 percent in April. Still, we continue to believe existing sales are near their floor already, and we expect a slow recovery in existing sales starting in the second half of 2024 as mortgage rates ease somewhat.
Nathaniel Drake
Economic and Strategic Research Group
June 28, 2024
Opinions, analyses, estimates, forecasts, beliefs, and other views of Fannie Mae's Economic & Strategic Research (ESR) Group or survey respondents 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 or survey respondents as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.