Fannie Mae expects seasonally adjusted existing home sales to reach an annualized rate of 3.9 million units in the fourth quarter, the lowest level since the third quarter of 2010.
Total housing sales are expected to reach approximately 4.8 million units in 2023, 4.7 million units in 2024, and 5.3 million units in 2025.
ESR Group’s 30-year fixed mortgage rate forecast averages 7.7% in the fourth quarter, 7.3% in 2024, and 6.9% in 2025.
In light of the downward revision to its home sales forecast, Fannie Mae now expects home purchases to reach $1.3 trillion in 2023, a $28 billion reduction from its October forecast.
As home sales increase, purchases are expected to rise to $1.4 trillion in 2024, but this has been revised down by $31 billion from the previous forecast to $1.6 trillion in 2025.
economic growth forecast
The group added new economic forecasts for 2025 to its November report.
Fannie Mae projects economic growth in 2025 to be 1.6%, unemployment to peak at 5.4% in mid-2025, and core inflation to trend upward. federal reserveThe target is 2%.
The group’s forecast for a mild recession in 2024 remains unchanged, with real gross domestic product (GDP) contracting by 0.4% on a Q4/Q4 basis.
While continued employment growth and slowing inflation combine to increase the likelihood of a soft landing, ESR Group believes the potential for slower consumption growth stemming from spending and income imbalances and real federal funds They argue that rising interest rates are weighing on consumers. A deterioration in corporate activity remains the most likely outcome.
“The economy is now decelerating from our initial expectations for strong third-quarter growth,” said Doug Duncan, Fannie Mae’s senior vice president and chief economist. “
The unemployment rate rose to 3.9% in October, 0.5 percentage points higher than the recent low of 3.4% in April.
Consumer price inflation (CPI) also slowed in October, falling to 3.2% from 3.7% in September.
Although energy prices fell significantly, the decline was offset by continued increases in shelter costs. Bureau of Labor Statistics The data showed.
“While employment growth continues to slow, increasing stress on consumers’ ability to maintain high levels of spending, this is not a surprising result, as the economic effects of monetary policy tightening tend to be delayed. At the same time, housing has been and continues to be under severe affordability pressure, resulting in home sales activity reaching recessionary levels,” Duncan added.
