A pessimistic Fannie Mae has had downgraded the outlook for the housing market in a new report just released. The mortgage giant says housing activity appeared to have lost momentum at the end of the second quarter and near-term indicators suggest only minor improvement in the second half of the year. Although residential investment still is expected to be a contributor to growth in 2014 and 2015, it does not appear likely to be a growing driver of growth going forward, as expected in the prior forecast, Fannie Mae said in a release. “With respect to housing’s contribution to growth this year, we have downgraded our outlook following the disappointing housing activity seen during the first half of the year,” Fannie Mae Chief Economist Doug Duncan said in the release. “The impact on mortgage rates from the market’s expectation that the Federal Reserve would soon start tapering their securities purchases, combined to some degree with the weather effect in the first half of 2014, led to very little seasonal growth in housing. In the first six months of the year, total sales have run below last year’s pace. Additionally, on the demand side, there appears to be a conservatism among consumers and their willingness to take on big-ticket purchases, such as homes. We currently estimate that 2014 will finish lower in total sales figures than 2013 – and that 2015, while stronger than 2013 and 2014, will not be the breakout year some are expecting.” Read the full release here.
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