Even though Jerome Powell announced three rate cuts in 2024, Fannie Mae Economic and Strategic Research (ESR) group continues to forecast a modest downturn in 2024. The group projects a return to growth in 2025.
“Last week’s comments by Chairman Powell, as well as the Federal Reserve’s updated Summary of Economic Projections, suggest increased Fed confidence that a soft landing has been achieved and inflation is headed sustainably to 2%,” Doug Duncan, Fannie Mae’s senior vice president and chief economist, said in a statement. “However, we continue to think there are reasons for concern that will likely lead to a mild economic downturn.”
Since the beginning of November, mortgage applications have rebounded approximately 15%. As a result, home sales will begin a “slow but meaningful recovery” in 2024, according to the December 2023 commentary from the Fannie Mae ESR Group. However, the woes that hindered home sales in 2023, such as affordability challenges and the lack of resale inventory, will persist.
Overall, the “combination of modest increases in home prices and still-elevated interest rates suggest a slow pace of recovery from previously recessionary levels of housing activity,” Duncan added.
HousingWire last week analyzed several of the 2024 industry forecasts. Fannie Mae was the least optimistic forecaster for both existing home sales and new home sales, while NAR was the most optimistic for both.
Expectations for existing home sales ranged from a seasonally adjusted annual rate of 4.21 million to 5.07 million by the end of 2024, and a range of 680,000 to 840,000 for the rate of new home sales.
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