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Hot Economy, Inflation Likely to Keep Rates 'Higher for Longer'

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Fannie Mae's Economic and Strategic Research Group predicts higher mortgage rates due to stronger economic and inflation data, leading to fewer Federal Reserve rate cuts. Despite this, an increase in new home listings is expected to boost sales, offsetting the impact of rising rates. The group forecasts a modest rise in existing home sales, with new listings outpacing sales, helping to stabilize housing inventory and slow down home price growth. However, the group anticipates a 4.8% rise in home prices for 2024 and a further 1.5% increase in 2025. The ESR Group suggests that interest rates may remain higher for a longer period, impacting home sales and affordability, but expects economic growth and inflation to moderate over time.
Il gruppo di ricerca economica e strategica di Fannie Mae prevede un aumento dei tassi ipotecari a causa di dati economici e sull'inflazione più forti, che porteranno a meno tagli dei tassi dalla Federal Reserve. Nonostante ciò, si prevede un incremento delle nuove offerte di case, il che dovrebbe stimolare le vendite, compensando l'impatto dell'aumento dei tassi. Il gruppo prevede un modesto aumento delle vendite di case esistenti, con nuove offerte che superano le vendite, aiutando a stabilizzare l'inventario delle abitazioni e a rallentare la crescita dei prezzi delle case. Tuttavia, il gruppo anticipa un aumento dei prezzi delle case del 4,8% per il 2024 e un ulteriore aumento del 1,5% nel 2025. Il gruppo ESR suggerisce che i tassi di interesse potrebbero rimanere più alti per un periodo più lungo, influenzando le vendite e l'accessibilità alle case, ma si aspetta che la crescita economica e l'inflazione si moderino nel tempo.
El Grupo de Investigación Económica y Estratégica de Fannie Mae predice tasas hipotecarias más altas debido a datos económicos e inflacionarios más fuertes, lo que conducirá a menos recortes en las tasas por parte de la Reserva Federal. A pesar de esto, se espera un aumento en las nuevas listas de casas, lo que debería impulsar las ventas, compensando el impacto del aumento de las tasas. El grupo pronostica un aumento modesto en las ventas de viviendas existentes, con nuevas listas superando a las ventas, ayudando a estabilizar el inventario de viviendas y a frenar el crecimiento del precio de las mismas. Sin embargo, el grupo anticipa un aumento del 4.8% en los precios de las casas para 2024 y un aumento adicional del 1.5% en 2025. El grupo ESR sugiere que las tasas de interés pueden permanecer más altas durante un período más largo, afectando las ventas y la accesibilidad de las viviendas, pero espera que el crecimiento económico y la inflación se moderen con el tiempo.
패니매의 경제 및 전략 연구 그룹은 경제 및 인플레이션 데이터가 강화됨에 따라 모기지 이자율이 상승할 것으로 예측하고, 이로 인해 연방준비제도(Fed)의 금리 인하가 줄어들 것이라고 전망했습니다. 그럼에도 불구하고 새 주택 목록이 증가함에 따라 판매가 촉진될 것으로 예상되어, 이자율 상승의 영향을 상쇄할 것으로 보입니다. 그룹은 기존 주택 판매가 소폭 증가할 것으로 예측하며, 새로운 목록이 판매를 초과함으로써 주택 재고를 안정화시키고 주택 가격 상승을 늦출 것으로 보입니다. 하지만, 2024년에 주택 가격이 4.8% 상승하고 2025년에 추가로 1.5% 상승할 것으로 예상됩니다. ESR 그룹은 금리가 장기간 높게 유지될 수 있으며, 이것이 주택 판매와 접근성에 영향을 미칠 수 있지만, 경제 성장과 인플레이션은 시간이 지남에 따라 완화될 것으로 기대합니다.
Le groupe de recherche économique et stratégique de Fannie Mae prévoit une augmentation des taux hypothécaires en raison de données économiques et inflationnistes plus solides, entraînant moins de baisses de taux de la part de la Réserve fédérale. Malgré cela, une augmentation des nouvelles inscriptions de maisons est attendue, ce qui devrait stimuler les ventes, compensant l'impact de la hausse des taux. Le groupe prévoit une hausse modeste des ventes de logements existants, avec de nouvelles inscriptions dépassant les ventes, aidant à stabiliser l'inventaire des logements et à ralentir la croissance des prix des maisons. Cependant, le groupe anticipe une hausse des prix des maisons de 4,8 % pour 2024 et une augmentation supplémentaire de 1,5 % en 2025. Le groupe ESR suggère que les taux d'intérêt pourraient rester plus élevés plus longtemps, impactant les ventes et l'accessibilité des logements, mais s'attend à ce que la croissance économique et l'inflation se modèrent avec le temps.
Die Wirtschafts- und Strategieforschungsgruppe von Fannie Mae prognostiziert höhere Hypothekenzinsen aufgrund stärkerer Wirtschafts- und Inflationsdaten, was zu weniger Zinssenkungen durch die Federal Reserve führt. Trotzdem wird ein Anstieg der neuen Hausangebote erwartet, der den Verkauf ankurbeln und die Auswirkungen steigender Zinsen ausgleichen soll. Die Gruppe prognostiziert einen moderaten Anstieg der Verkäufe bestehender Häuser, wobei neue Angebote die Verkäufe übersteigen und dazu beitragen, den Wohnungsmarkt zu stabilisieren und das Wachstum der Hauspreise zu verlangsamen. Jedoch erwartet die Gruppe einen Anstieg der Hauspreise um 4,8% für 2024 und einen weiteren Anstieg um 1,5% für 2025. Die ESR-Gruppe deutet darauf hin, dass die Zinssätze möglicherweise länger höher bleiben könnten, was den Hausverkauf und die Erschwinglichkeit beeinflusst, aber sie erwartet, dass sich das wirtschaftliche Wachstum und die Inflation mit der Zeit mäßigen werden.
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Rise in New Home Listings Projected to Boost Sales Despite Recent Run-up in Mortgage Rates

WASHINGTON, April 23, 2024 /PRNewswire/ -- Stronger-than-expected economic and inflation data have pushed interest rates higher and financial markets to price in fewer Federal Reserve rate cuts this year, according to the April 2024 commentary from the Fannie Mae (OTCQB: FNMA) Economic and Strategic Research (ESR) Group. While higher mortgage rates present renewed headwinds to the expected recovery in home sales this year, as well as homebuyer affordability more generally, the ESR Group notes that new listings of homes available for sale have continued to rise. While the ESR Group is forecasting existing home sales to rise modestly over the course of the year, it expects the flow of new listings to outpace home sales, which should help gradually thaw housing inventory and contribute to decelerating home price growth. However, based on incoming home price data, which continue to come in strong, the ESR Group expects home prices to rise 4.8 percent in 2024, up 1.6 percentage points from last quarter's projection, and then another 1.5 percent in 2025.

While interest rate cuts appear to be on hold due to the recent mix of strong economic data and hot inflation reports, the ESR Group continues to forecast slowing employment and economic growth, as well as progress toward 2-percent inflation over its forecast horizon. However, recent data have caused a reassessment of the pace of decelerating inflation, and the ESR Group now expects the Consumer Price Index to end 2024 at a 3.1 percent annual rate, compared to the 2.5 percent previously projected.    

"Financial markets rapidly repriced their interest rate expectations following hotter-than-expected inflation reports and ongoing strong payroll employment gains," said Hamilton Fout, Fannie Mae Vice President, Economic and Strategic Research. "While we still expect economic growth and inflation to moderate going forward – and, thus, for mortgage rates to drift downward – interest rates existing in a 'higher for longer' state seems to be an increasingly real possibility in the eyes of market participants, as well as some homebuyers and sellers. While we've recently seen evidence that some potential home sellers are becoming more acclimated to the higher mortgage rate environment and putting their homes on the market, the recent move upward in rates is yet another headwind to the recovery of home sales, and it intensifies longstanding affordability challenges for consumers."

Visit the Economic & Strategic Research site at fanniemae.com to read the full April 2024 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, Housing Forecast, and Multifamily Market Commentary. To receive e-mail updates with other housing market research from Fannie Mae's Economic & Strategic Research Group, please click here.

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economic & Strategic Research (ESR) Group included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the ESR group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

About the ESR Group
Fannie Mae's Economic and Strategic Research Group, led by Chief Economist Doug Duncan, studies current data, analyzes historical and emerging trends, and conducts surveys of consumer and mortgage lender groups to provide forecasts and analyses on the economy, housing, and mortgage markets. The ESR Group was awarded the prestigious 2022 Lawrence R. Klein Award for Blue Chip Forecast Accuracy based on the accuracy of its macroeconomic forecasts published over the 4-year period from 2018 to 2021.

About Fannie Mae
Fannie Mae advances equitable and sustainable access to homeownership and quality, affordable rental housing for millions of people across America. We enable the 30-year fixed-rate mortgage and drive responsible innovation to make homebuying and renting easier, fairer, and more accessible. To learn more, visit:
fanniemae.com | Twitter | Facebook | LinkedIn | Instagram | YouTube | Blog

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SOURCE Fannie Mae

FAQ

What is the impact of stronger economic and inflation data on interest rates according to Fannie Mae's Economic and Strategic Research (ESR) Group?

Stronger economic and inflation data have led to higher interest rates and fewer expected Federal Reserve rate cuts.

How are higher mortgage rates affecting the recovery in home sales?

Higher mortgage rates pose challenges to the expected recovery in home sales, impacting homebuyer affordability. However, an increase in new home listings is projected to help boost sales.

What does the ESR Group expect regarding existing home sales and new listings?

The ESR Group forecasts a modest rise in existing home sales, with new listings expected to outpace sales, contributing to stabilizing housing inventory and slowing down home price growth.

What are the projected home price increases for 2024 and 2025 according to the ESR Group?

The ESR Group anticipates a 4.8% rise in home prices for 2024 and an additional 1.5% increase in 2025.

How does the ESR Group view the potential duration of higher interest rates?

The ESR Group suggests that interest rates may remain higher for a longer period, impacting home sales and affordability.

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fannie mae serves the people who house america. we are a leading source of financing for mortgage lenders, providing access to affordable mortgage financing in all markets at all times. our financing makes sustainable homeownership and workforce rental housing a reality for millions of americans. we also help make possible the popular 30-year, fixed-rate mortgage, which provides homeowners with stable, predictable mortgage payments over the life of the loan. our tools and resources help homebuyers, homeowners, and renters understand their housing options. we put our customers and partners at the center of everything we do. we apply our experience and expertise to deliver innovative solutions to help our customers succeed. at fannie mae, our people pour their hearts into everything they do. because we know it makes a real difference in others’ lives. we are committed to moving forward with our partners to build a stronger, safer, more efficient housing finance system. join us at the hea