Fannie Mae shared their outlook on the housing market on Monday, and it is not in a positive direction. Fannie thinks that too much momentum was lost during the first half of the year, and because of this, they believe that the housing market will slow down for the remainder of the year and into 2015.
In their August forecast, Fannie states that they expect home construction starts to hit 642,000 this year. This number is down about 8% from their forecast of 696,000 in July. Along with this, Fannie also lowered their outlook for new single-home purchases for this year from 486,000 in July down 11% in August to 431,000.
Fannie Mae’s Chief Economist, Doug Duncan was quoted in saying “Rising mortgage rates, bad winter weather and consumer “conservatism” are all hitting the housing market”. Duncan also said that “With respect to housing’s contribution to growth this year, we have downgraded our outlook following the disappointing housing activity seen during the first half of the year. We currently estimate that 2014 will finish lower in total sales figures than 2013 – and that 2015, while stronger than 2013 and 2014, will not be the breakout year some are expecting.”
Although Fannie has a less than stellar outlook for the next year, not everyone feels the same. In fact, many home builders are very confident in the future housing market, the most confident that they have been all year. Many home builders have an optimistic outlook about current and future sales, and low mortgage rates and job growth are big factors in that.
My thoughts on the matter:
Although mortgage rates are currently in the low 4’s and home builder confidence has reached a 7 month high, will what Fannie Mae thinks actually be true? I don’t know. I’m not in the market for a home and won’t be anytime soon, so it doesn’t really affect me. Also, as a random idea, why is Doug Duncan talking about rising rates and winter weather when it’s the middle of August and rates have stayed pretty much the same .10% range for the past few months? Maybe I’m missing something here, but what do I know, I’m no mortgage expert.
Are you looking to refinance your current mortgage or buy a new home? Rates are close to the lows of the year, and you may be able to lock in a low rate for many years to come. Call us today to get a free rate quote or to speak with one of our licensed mortgage professionals.