Economic growth during the second half of 2014 likely won’t be strong enough to offset the weak activity from the first two quarters of the year, according to Fannie Mae’s Economic and Strategic Research Group.

According to Fannie’s ESR, the economy experienced the worst performance in five years during the first quarter of 2014.

The ESR Group has revised their full-year 2014 GDP forecast to real growth of approximately 1.5%, down from 2.1% in the prior forecast.

(Notably, this agrees with a forecast made July 7 by a senior financial writer at HousingWire.)

“Our findings in the July forecast suggest that full-year growth in 2014 likely will be weaker than 2013,” said Fannie Mae Chief Economist Doug Duncan. “We expect the economy to grow approximately 3% in the second half of the year, although there is an element of uncertainty given government statisticians’ difficulty in assessing the full scope of healthcare expenditures.”

Reasons cited include the significant downward revision in healthcare spending.

Incoming data suggest only a moderate pickup in growth for the second quarter – likely resulting in an essentially flat first half of the year.

In the third and fourth quarters, economic activity is expected to accelerate, driven largely by consumer spending and, to a lesser degree, business capital investment and residential investment. Additionally, government spending is expected to contribute to growth for the first time in five years while inventory investment and net exports are expected to subtract from growth this year.

 “Overall, our forecast calls for growth to come in at around 1.5% for the year, which would be the worst performance of Q4-over-Q4 growth in the current economic expansion. On the bright side, real personal income grew for the fifth consecutive month in May and hiring has continued on an upward trajectory, which should help boost consumer spending during the remainder of 2014,” Duncan said.

“Housing data point to a continued but modest rebound in the housing market, in line with our prior forecast,” said Duncan. “Recent housing activity picked up seasonally as we expected, yet many indicators remain near or below the levels for the same period last year. For all of 2014, we continue to expect total home sales to decline about 2% and total mortgage originations to decline approximately 41%. We also expect total single-family mortgage debt outstanding to rise slightly this year before strengthening further in 2015.”