The fading impact of last year’s fiscal stimulus and slow business investments and consumer spending resulted in a sluggish GDP growth outlook for April, according to the Fannie Mae Economic and Strategic Research Group’s (ESR) report.
The report states economic growth for 2019 continues to be forecast at 2.2%, down from 3% in 2018.
“Incoming data continues to support our call for slower economic growth in 2019,” said Fannie Mae Chief Economist Doug Duncan in the report. “Domestic demand growth has slowed as businesses and consumers exert greater caution amid trade uncertainty and capital markets volatility.”
Fannie Mae and Freddie Mac's March report foretasted a declaration in the overall economic growth predicting the U.S. GDP growth at 2.5% in 2019 and 1.8% in 2020.
One interest rate hike is still expected this year, but the timing of it has been pushed back to December, according to the report.
Home sales in 2019 are projected to remain at 2018 levels and are supported by wage growth, slowing home-price appreciation, and lower mortgage rates. The ESR report states that purchase-mortgage origination volume is projected to rise amid flat home sales and slower home price appreciation.
“On housing, the recent dip in mortgage rates to their lowest level in over a year—combined with wage gains and home price deceleration—supports our contention that home sales will stabilize in 2019,” Duncan said. “The greatest impediment to both sales and affordability continues to be on the supply side, as new inventory, particularly among existing homes, is being met quickly by strong demand—as evidenced by the already thin months’ supply hitting a new one-year low.”
March's report predicted the 30-year fixed-rate mortgage rate to remain unchanged from 2018 averaging 4.6%in 2019 before increasing to 4.9% in 2020.