03/29/2024 | Press release | Distributed by Public on 03/29/2024 10:56
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:
Prior to the fourth quarter surge in GDI, we had noted that the significantly weaker figures relative to the theoretically equivalent GDP numbers added uncertainty and downside risk to our forecast. Both GDP and GDI now point to an economy that grew well above trend in the fourth quarter. Still, we continue to expect a slowing in economic growth in 2024 as higher interest rates weigh on spending and investment. Consistent with this view, shipments in core capital goods, a proxy for business investment, contracted in February. Real personal consumption expenditures showed some unexpected strength in February given the earlier soft reading of control group retail sales, but they followed a downward revision to January. Further, real disposable income growth remains sluggish, resulting in a likely unsustainably low saving rate, supportive of a slowdown in spending as the year progresses. On the inflation front, the PCE price index is tracking above our Q1 forecast, which will likely lead us to revise upward our forecast.
New home sales are currently tracking modestly below our forecast, which will likely lead us to revise downward our forecast in the near term. Still, we continue to expect new home sales to generally drift upward this year as homebuilder confidence is rising and starts activity remains robust. On the existing side, the gain in pending sales suggests that, on the surface, existing home sales should rise in March. However, the nearly 5 percent drop in pending sales the month prior failed to predict the 9.5 percent jump in existing sales in February, so we continue to believe that some giveback in March is likely.
Nathaniel Drake
Economic and Strategic Research Group
March 29, 2024
Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economic and 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, 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, 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.