For the first time, Fannie Mae has released an outlook for 2024 as 2022 quickly draws to a close.
This release was highlighted in Fannie Mae’s Research and Insights Blog which overall is still predicting a downturn of 0.6% in 2023, and is now predicting improvement moving into 2024.
For its first take on 2024, Fannie Mae is projecting a total sales of 5.25 million housing units, up 18.6% from 2023’s forecast, as they expect a “pullback” in mortgage rates amid a broader economic recovery while new home sales will help ongoing inventory levels.
Fannie Mae also left their forecasts for the remainder of 2022 and all of 2023 unchanged; 2022 is expected to see 5.67 million housing units sold by the end of the year, while 2023 is expected to see 4.42 million units sold. They further predict that home sales will hit the bottom of the trough during the second quarter of 2023—at a selling pace of 4.27 million annualized units—as the full effects of higher mortgage rates and the projected recession take hold.
Given this information, Fannie Mae did increase 2022 home sales volume to increase to $2.34 trillion, while they lowered 2023’s expectations to $1.71 trillion from $1.74 trillion.
“Pending sales, which lead closings on average by 30-45 days, also fell 10.2% in September and purchase mortgage applications trended downward over the past month according to the Mortgage Bankers Association,” Fannie Mae said. “Together, these point to further existing home sales declines over the remaining months of 2022. We forecast total existing home sales will be 5.03 million in 2022 and 3.90 million in 2023 before rebounding in 2024 to a pace of 4.60 million.”
While GDP returned to positive territory in the third quarter of 2022, continued volatility in international trade has had an “outsized effect on the topline GDP numbers this year.”
Looking at inflation, the most recent numbers indicate that inflation may have peaked as the Consumer Price Index’s inflation report in October came in under Fannie Mae’s predictions.
“While monthly inflation data can be volatile, as has been the case recently, there are signs in this report that inflationary pressures may be easing broadly,” Fannie Mae wrote. “We have long predicted that core goods prices would eventually drag on CPI as supply chain pressures eased and demand for goods declined, something which appears to have finally materialized in this report. Especially of note was a 2.4 percent decline in used auto prices. Further, core services inflation got some relief from falling health care prices, stemming from the lagged effect of how the BLS calculates health insurance costs. Both of these trends are likely to continue.”
Click here to see Fannie Mae’s insights blog post in its entirety.