Fannie Mae increased its mortgage origination forecast as
"Housing remains a net positive to the economy, as the industry anticipates growth fueled by strong household balance sheets, low mortgage rates, and a surge in refinance activity,"
"However, the housing industry still doesn't have an answer for the related problems of low supply and affordability. While home price appreciation has largely moderated — particularly compared to the recent past — and demand for modestly priced homes has proven strong and resilient, the lack of affordable inventory continues to cap sales and limit the potential pool of would-be homeowners."
On the macroeconomic front, Duncan now expects two short-term rate cuts from the
"The heightened uncertainty, stemming in part from the seemingly intractable trade dispute between the U.S. and China, appears to have reduced business' investment incentive, which is now poised to be a material drag on growth over the forecast period," Duncan said. "With consumer spending the principal remaining GDP growth driver, in addition to the recent reinversion of the yield curve suggesting that market participants expect economic activity to slow further, we believe that the Fed will take a more accommodative posture beginning with a rate cut at the July meeting of the FOMC."
Fannie Mae now calls for $1.75 trillion in total volume this year, up from $1.68 trillion in
Purchase activity will still predominate, with just under $1.2 trillion of volume (an increase of $12 billion from the June forecast). But refinance activity will just be under one-third of the total at $554 billion, compared with $494 billion in last month's outlook.
Duncan raised his
Fannie Mae increased its 2020 forecast to $1.69 trillion from $1.65 trillion in June. It raised its purchase outlook by $10 billion to $1.35 trillion and the refi forecast by $28 billion to $456 billion.