Fannie Releases Latest Economic and Housing Forecast
Written By: Joel Palmer, Op-Ed Writer
Fannie Mae economist expect mortgage originations to remain above pre-pandemic levels in 2022.
The company’s Economic and Strategic Research Group released its latest commentary this week, in which it revised downward its full-year 2021 projection for GDP growth for the third consecutive month. Its GDP project was lowered from 5.4 percent to 4.9 percent due to a more pessimistic view of the speed at which current supply chain disruptions will resolve.
Supply constraints are affecting the housing market as well. Fannie reported that single-family starts declined by 2.8 percent in August. And though the number of homes under construction reached its highest level since 2007, many of these homes are delayed due to bottlenecks as varying materials are in short supply.
“Recent public comments and anecdotes from homebuilders suggest these problems will not be alleviated in the near term,” the ESR said in its commentary. “Additionally, a lack of labor (particularly in the skilled trades) is limiting construction, and the most recent labor report showed only a modest increase in residential construction workers in September. While we expect these issues to alleviate eventually, as is the case with the general economy, these constraints will likely persist well into next year.”
Fannie also noted that existing home sales fell 2 percent in August, which was less of a decline that previously forecast. Also, August pending sales unexpectedly jumped by 8.1 percent. These and other factors led Fannie to upgrade its forecast for third-quarter and fourth-quarter existing home sales.
However, new listing inventory continues to be a problem and Fannie said they are not strong enough to support the current sales pace. Therefore, sales are expected to decline in 2022.
The lack of listings continues to put upward pressure on home prices. The most recent reading of the CoreLogic National House Price Index for the month of July showed annual appreciation of 19.7 percent, the fastest annual growth rate on record, up from 18.7 percent a month prior.
Fannie revised its estimate for last year’s origination volume to $4.4 trillion, down $162 billion from its previous estimate.
About the Author
As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
