MBA Economists at Fannie Mae Still Anticipate a Mild Recession in 2024 – My MBA Career

Last Updated on December 21, 2023 by Robert C. Hoopes

Title: Home Sales Expected to Hit Bottom in Q4 2023 as Mortgage Rates Decline, Predicts My MBA Career Site

Subtitle: Fannie Mae and the Mortgage Bankers Association provide insights into the US housing market and economy for 2024

Closely watched forecasts are indicating that home sales are anticipated to reach their lowest point in the fourth quarter of 2023. This prediction comes from economists at Fannie Mae and the Mortgage Bankers Association, who are closely monitoring the trends in the US housing market for the coming years.

Additionally, experts are expecting a significant drop in mortgage rates in the upcoming year, providing potential relief for homebuyers. This anticipated decline in rates is seen as a positive sign for those looking to enter the housing market or refinance their existing mortgage.

However, it is not all smooth sailing ahead, as forecasts also suggest that the US economy may experience a modest recession in 2024. To counter this potential downturn, the Federal Reserve is expected to lower interest rates in the spring, aiming to stimulate economic growth and avoid a recession.

Both Fannie Mae and the Mortgage Bankers Association are in agreement that the economy will contract for two consecutive quarters in 2024. This prediction necessitates a need for proactive measures to stabilize the economy and restore confidence in the market. Fannie Mae economists, albeit admitting their previous incorrect recession forecast for 2023, are now projecting modest growth in home sales for the year 2024, with a minimal increase of 0.1 percent.

While home sales may have bottomed out towards the end of 2023, challenges to growth remain. The affordability of homes coupled with the lock-in effect pose obstacles to achieving substantial sales growth. However, the Mortgage Bankers Association maintains an optimistic outlook, predicting a 6.5 percent increase in home sales in the coming year. In addition, they anticipate a 6 percent rise in existing home sales, with a significant 10 percent surge in new home sales.

The recovery of home prices has exceeded expectations, rebounding moderately from declines experienced in late 2022. This resilience in the market could potentially boost mortgage lending, with experts predicting a 14 percent increase in purchase mortgage volume. Furthermore, the volume of refinancing is projected to bounce back by 56 percent in the upcoming year.

Fannie Mae forecasts a 13 percent rise in purchase mortgage originations and an impressive 79 percent surge in refinancings. These positive forecasts within the housing market highlight the resilience of the industry and offer opportunities for those looking to enter or refinance their homes.

As we head into 2024, the housing market and the overall US economy face both challenges and opportunities. With the anticipation of lower mortgage rates and increased home sales, individuals aiming to enter the market or take advantage of refinancing options may find favorable conditions. However, the looming recession and affordability concerns remind us that vigilance and foresight are essential to navigate the ever-changing landscape of the housing market.