03/31/2023 | Press release | Distributed by Public on 03/31/2023 12:50
Key Takeaways:
The third estimate of GDP came with the release of a -1.1 percent annualized gross domestic income (GDI) measurement for Q4, a stark contrast from the +2.6 percent annualized GDP figure. While large statistical discrepancies such as this are frequently revised away later and we had already partially discounted the strength of the GDP number due to large swings in inventory investment, the GDI report adds to evidence that the economy had slowed toward the end of 2022. However, we also know the economy picked up steam to begin 2023, with the one-time level shift in consumption in January only experiencing a partial giveback in February. With another small gain in real disposable incomes in February, we still believe consumption is on track for a strong quarter barring any potential disruptions to consumer confidence following recent banking turmoil (notably, we didn't see much evidence of this in the Conference Board survey).
In housing, we had expected a rather large pullback in pending sales for February. Based on incoming mortgage application data we continue to expect a pullback to come, perhaps occurring in March. Still, the stronger-than-expected reading points to some upside risk in our near-term home sales forecast. Even with mortgage rates pulling back somewhat in recent weeks, we expect existing home sales to be generally soft as affordability will remain a major constraint and most existing homeowners will remain "locked in" to their existing low-rate mortgages. This is likely to continue to weigh on home price growth as well, which we expect to be modestly negative through 2023 and 2024.
Nathaniel Drake
Economic and Strategic Research Group
March 31, 2023
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.