Threat of downturn derails housing recovery: Fannie Mae
The threat of another economic downturn is stalling a housing recovery, Fannie Mae said in a report Monday. The economy remains in a fragile state and is highly susceptible to additional shocks that could further erode economic growth, according to a study provided by the government-sponsored enterprise's Economics & Mortgage Market Analysis group. Fannie pointed to a stubborn unemployment rate that's expected to remain above 9% throughout 2012, making individuals more likely to become renters than homeowners. "The weakening economic backdrop, a persistently high unemployment rate, and fear of a double-dip recession are casting a shadow over the housing market," Fannie Mae Chief Economist Doug Duncan said. "In turn, respondents to the Fannie Mae National Housing Survey indicate a continued shift of sentiment toward renting and away from ownership, at least in the near term." "In the second quarter, 26% of Americans were worried about their job stability. When combined with the 9% of unemployed households, you have more than one-third of the potential workforce worried about their employment status. This is hardly a strong support for housing demand," he said. Duncan's latest statement comes as Fannie Mae economists predict slugglish GDP growth of less than 2% throughout 2012. Existing-home sales fell in July along with single-family construction spending, while multifamily construction spending began to rise after attracting the attention of large investors, Duncan said. Write to: Kerri Panchuk.