04/05/2024 | Press release | Distributed by Public on 04/05/2024 10:16
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Key Takeaways:
Employment growth was well above consensus and our expectations of roughly 200,000 new jobs, likely leading to a near-term upward revision to our forecast. The improvement in the household survey in March, which showed 498,000 jobs added after declining for several months, helps ease some concerns that the establishment survey has been overstating recent job growth, though the cumulative divergence between the two surveys remains substantial. Still, we believe the ongoing strength in the labor market means the Fed is unlikely to be in a rush to begin cutting rates, likely keeping mortgage rates elevated above our current forecast.
Other economic indicators were also generally positive, with the ISM Manufacturing index pointing to a modest expansion in the industry for the first time in 18 months. The headline services index was less rosy, though the components more indicative of actual activity remained well above the expansionary threshold of 50. Additionally, while trade is set to be a drag on GDP in Q1, large improvements in both real imports and exports are solid signs for consumer demand. Ongoing weakness in auto sales, on the other hand, likely reflects higher interest rates weighing on demand for durable goods transactions. This dynamic is in line with our forecast for generally sub-trend growth in 2024 compared to the well-above trend rate in 2023.
Nathaniel Drake
Economic and Strategic Research Group
April 5, 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.