Federal National Mortgage Association (OTCQB:FNMA), commonly known as Fannie Mae, expects the U.S. economy to decelerate next year.
They forecast GDP to decline slightly in 2024 by 0.3%, followed by 1.7% growth in 2025. In the housing sector, challenges are anticipated to maintain existing home sales at their lowest rate since the Great Financial Crisis. It’s expected that home sales and mortgage originations will start to recover slowly in 2024.
These forecasts were recently included in the outlook presented by The Economic & Strategic Research (ESR) Group at Fannie Mae.
The Vanguard Real Estate ETF (NYSE:VNQ), the Schwab US REIT ETF (NYSE:SCHH), the Real Estate Select Sector SPDR ETF (NYSE:XLRE) and the iShares U.S. Real Estate ETF (IYR) are popular ways to get exposure to equity in the real estate sector.
Housing Market’s Pivotal Transformation
The housing market in 2024 is expected to experience a significant yet gradual transformation. As the economy slows down, a steady recovery is likely to drive resilience in home sales and mortgage originations.
The prevailing challenges of affordability, lock-in effects, and a scarcity of available housing inventory have conspired to keep existing home sales at their slowest pace. However, against the odds, new home sales have displayed an unexpected resilience in the face of soaring mortgage rates, hinting at an imminent rebound. The recent dip in mortgage rates from their peak in October serves as a promising harbinger for increased sales, although rates remain relatively high on a YoY basis.
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Glimmer Of Optimism
Despite the headwinds, Fannie Mae does see reasons for optimism in their forecast.
Total single-family mortgage originations are anticipated to grow from $1.5 trillion in 2023 to $1.9 trillion in 2024 and further to $2.3 trillion in 2025. This trajectory, fueled by home price appreciation and modest growth in refinance activity, underscores the market’s resilience and adaptability.
In 2024, the housing market is expected to witness a slow recovery, with total home sales marginally surpassing the figures of 2023. October’s nadir, with existing sales dropping to an annualized pace of 3.79 million, is likely to mark the…
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