Brace for Home Price Downturn Amid Inventory Scarcity
According to housing bulls, the U.S. housing market has stabilized, with new home sales increasing due to builder incentives and falling mortgage rates.
As mortgage rates fall below 7% and the housing market enters the busier spring season, many regional housing markets are shifting from correction mode to growth mode.
Fannie Mae suggests that the housing market recession is not yet over and may regain momentum during the slower summer and fall months.
Private residential fixed investment, a measure of housing market activity, has declined for four consecutive quarters. Fannie Mae anticipates further contractions.
Fannie Mae predicts a significant slowdown in housing starts due to a large number of multifamily units under construction and tightening credit for construction lending.
Fannie Mae's forecast model suggests that the declines in the housing market could contribute to pushing the U.S. economy into a recession. GDP declines are expected in the forecasted quarters.
While the housing market's decline may contribute to a recession, economists believe that it can also serve as a buffer against a deep recession.
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