We’re already seeing the immediate effects of the market slowdown, but an adjusted outlook from Fannie Mae suggests we’re only getting started.
The lender’s latest forecast calls for total home sales to decrease by 16.2 percent this year. That is a further downward revision from last month when Fannie Mae analysts called for a decline of 15.6 percent.
The report also projects a total mortgage origination of $2.47 trillion in 2022, down from $4.47 trillion in 2021. The lender also adjusted its 2023 outlook, now anticipating $2.29 trillion in mortgage originations next year.
“The economy is progressing largely as we’d previously forecast,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “The near-term decline in gas prices has given consumers a chance to catch their breath and shift some spending elsewhere. Likewise, lower interest rates at the longer end of the yield curve should be supportive of the economy through the end of 2022, which is why we’re forecasting modest economic growth in the second half. However, we maintain the view that a modest recession is likely to emerge in the new year as the labor market softens and the effects of tighter monetary policy are more acutely felt.”