06/24/2022 | Press release | Distributed by Public on 06/24/2022 12:57
Key Takeaways:
The rate of increase for industrial production slowed in May and manufacturing output declined outright, supportive of our view that the economy is slowing. Still, we do not think these measures indicate an imminent recession, as some slowdown was likely given the large 1.3 percent jump in industrial production in April and because capacity utilization is at 79 percent, higher than its recent historical average. Consumer sentiment, which is lower than at any point during the Great Recession or the 1970s' stagflation period, is also consistent with a slowing economy. However, it is important to note that the Conference Board's consumer confidence index has held up much better than the sentiment index due to differences in the composition of questions, so we are unlikely to revise our forecast on an indicator that has been significantly more pessimistic than hard consumption data for several months now.
Existing home sales slid again in May but were largely in line with our expectations for the quarter. Though the May sales pace remains slightly above the 2019 average sales pace of 5.3 million, we expect a further decline in sales through the end of the year as higher mortgage rates and historic home price growth keep many would-be buyers on the sideline. On the new home sales front, the April and May average sales pace is in line with our current forecast for Q2. Even with the rebound in May sales and the upward revision to April, we continue to think the general trend for new home sales is down, and we expect some decline to the rate of home sales in June. Given incoming data and no relief on mortgage rates in sight, we are unlikely to significantly revise our expectations at this time.
Nathaniel Drake
Economic and Strategic Research Group
June 24, 2022
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.