The Economy Hits an Air Pocket According to Fannie Mae's Economic & Mortgage Market Analysis Group
Global Events Affecting Economic Outlook
No Improvement for Outlook in Housing Sector
WASHINGTON, April 19, 2011 /PRNewswire/ -- Global events during March, including ongoing political turmoil in the Middle East and North Africa, the surge in oil prices, and supply disruptions from the tragedy in Japan, have dampened U.S. economic growth in the first half of 2011, according to the April 2011 Economic Outlook released today by Fannie Mae's (OTC Bulletin Board: FNMA) Economics & Mortgage Market Analysis Group. The slowdown in growth is expected to be temporary, however, with a modest acceleration in economic growth projected for the second half of the year. The group forecasts economic growth to average 3.1 percent for 2011, a downgrade from 3.5 percent projected in the prior forecast.
Home sales were weak in the first part of 2011, with distressed sales (foreclosure and short sales) continuing to account for more than a third of total existing home sales. In turn, a rising share of distressed sales and the winding down of various programs to support the housing market have caused home price measures to decline.
"Home price expectations have deteriorated during the past several months, which could cause some potential homebuyers to remain on the sidelines -- and further sharp cutbacks in housing demand would pose a risk to the fragile housing recovery," said Fannie Mae Chief Economist Doug Duncan. "We expect a little more decline in house prices at the national level than we had thought previously, but expect prices to begin stabilizing later this year."
On the upside, recent employment reports have been very strong, with more than 230,000 private sector payroll jobs added in each of the last two months. "We anticipate there will be continued reasonably good news in employment through the rest of the year," said Duncan. "If that continues, we expect housing to move in a similar positive direction -- hopefully by the second half of 2011."
For an audio synopsis of the April 2011 Economic Outlook, listen to the podcast on the Economics & Mortgage Market Analysis site at www.fanniemae.com. Visit the site to read the full April 2011 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, and Housing Forecast.
Also available via link from the Economic Developments Commentary is the Multifamily Market Commentary by Kim Betancourt, Director, Multifamily Economics and Market Research. The Commentary provides information on current multifamily market conditions with a focus on multifamily mortgage debt outstanding in 2010.
Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economics & Mortgage Market Analysis (EMMA) 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 EMMA 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 EMMA 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.
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SOURCE Fannie Mae