Fannie Mae Is Optimistic About a Housing Market Recovery
The start of 2024 brought hope for a boost in the slow U.S. housing market as there was optimism for a drop in mortgage rates. However, recent data indicates a rise in mortgage rates despite a booming economy and the Federal Reserve’s cautious approach to reducing benchmark interest rates. As of February 23, the 30-year fixed-rate mortgage was at 7.21%, and Freddie Mac’s survey reported an approaching average rate of 7% for the week.
According to Housing Wire, Fannie Mae, however, remains optimistic that housing market activity will pick up as existing home sales and new single-family housing starts are expected to grow modestly in 2024.
While existing home sales dipped slightly in December by 1% to a seasonally adjusted annual rate of 3.78 million units, an increase in mortgage applications and December pending home sales that led to average closing times of 30 to 45 days indicate that a modest rebound in sales is underway.
With a low supply of existing homes for sale, demand for new homes is likely to remain strong, and the limit on new home sales will be determined by homebuilder production capacity, according to a report released Friday by Fannie Mae’s Economic and Strategic Research (ESR) group.
“Single-family permits in contrast edged up 1.6 percent in January, back in line with the overall starts series,” the report noted. “With single-family permits and starts now back in alignment, we expect new single-family construction to continue to drift upward in coming months.”
Fannie Mae forecasts total mortgage origination volume of $1.92 trillion in 2024, down slightly from $1.98 trillion in its previous forecast. Volume is expected to climb to $2.36 trillion in 2025, compared to the ESR group’s January forecast of $2.44 trillion.
