The second half of the year in the housing market is still expected to grow despite the recent dents in the market from volatility.
According to Fannie Mae’s Economic & Strategic Research Group, “Continued positive consumer spending and other solid domestic fundamentals are expected to offset recent market volatility and support modest improvement in U.S. economic growth in the second half of the year.”
“Our forecast for the year is largely unchanged despite recent market volatility. Fundamentals are positive, suggesting potential for some improvement in the fourth quarter,” said Fannie Mae Chief Economist Doug Duncan.
Housing wasn’t too hindered either.
“Continued strong performance of year-to-date home sales and modestly weakening leading indicators confirm that our prior forecast of existing home sales this year remains valid,” Duncan said.
Purchase mortgage originations were revised slightly higher due to lower actual and projected cash sales.
“Sub-par single-family new home construction, however, has been somewhat disappointing, and as a result we have lowered our projected single-family starts projection for 2016,” said Duncan.
Total mortgage originations is anticipated to increase approximately 25% for all of 2015, and total production volume is expected to decrease somewhere in the area of 18% in 2016, with the refinance share falling about 15 percentage points.
Over the past month, data generally showed improving economic activity even with the heightened anxiety on Wall Street.
Additionally, real consumer spending ticked up in July and the August jobs report was solid.
Duncan explained that although core personal consumption expenditures experienced their weakest gain in more than four years in July, real consumer spending rebounded during the month.
Overall, Fannie Mae anticipates economic growth of 2.4% for 2015, up slightly from 2.1% in the prior forecast.
The report said that consumer and government spending as well as nonresidential and residential investment are expected to contribute to growth while net exports and inventory investment will likely pose headwinds.