Smart Borrower Blog

Fannie Mae Rethinks 2014 Housing Forecast


Sep 3rd, 2014 @ 7:57 PM by Amber Nelson


Mortgage finance company Fannie Mae downgraded its 2014 and 2015 predictions in August for the U.S. housing market, forecasting less rosy outcomes based on the year’s lackluster performance so far.

Compared with its July forecast, the Fannie Mae August forecast reduced its expectations for new single-family home sales by 11 percent to 431,000 for the year, down from 486,000. The forecast for single-family home construction starts was also slashed 8 percent from July, to 642,000 in 2014, down from 696,000.

Fannie predicts now that total sales of existing homes will fall 3.5 percent this year from 2013, topping out at 4,910,000 homes. In 2015, Fannie says existing home sales will then rise 4.6 percent. And total mortgage originations are now expected to fall to a yearly total of $1.11 trillion, down from last year’s $1.91 trillion. Fannie’s forecast calls for another drop in originations in 2015, down to $1.06 trillion.

“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,” said Fannie Mae chief economist Doug Duncan in a statement. He explained, “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… 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.”

Fannie Mae also forecasted that mortgage interest rates one 30-year foxed rate loans will only reach 4.3 percent, down from earlier predictions putting them closer to 5.0 percent.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

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