Builder activity, lower rates boost Fannie's origination estimates
Lower rates and signs that more affordable housing inventory is being built drove Fannie Mae's 2019 origination numbers higher in its latest forecast.
The government-sponsored enterprise also revised its total origination figure for the past year upward based on newly released Home Mortgage Disclosure Act data.
Fannie's new estimate for 2018 is $1.77 trillion and its revised estimate for 2019 is $1.97 trillion. Last month Fannie forecast that there would be $1.84 trillion of home loans originated in 2019, and estimated that lenders produced $1.64 trillion last year.
"Both consumer and lender attitudinal surveys hit new highs this month due to near historically low mortgage rates and generally favorable household balance sheets, but inventory constraints, particularly in the affordable space, continue to hold back housing market sales volume," Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a press release. "Refreshingly, in the absence of existing stock, homebuilders appear to be increasingly focused on entry-level homes."
Despite the increased optimism among consumers and lenders, the rate at which Fannie expects originations to grow year-to-year is slightly lower than forecast the previous month at 11%. This is in part because the 2019 home resale outlook is now worse due to supply issues.
Overall, Fannie's outlook on housing and the economy remain mixed.
"Domestic economic data continue to paint a picture of generally positive fundamentals amid a backdrop of continued volatility and uncertainty," Duncan said. "Consumer spending remains the engine driving the economy forward, but faltering business investment and worrying downside risks, including the ongoing trade tensions between the U.S. and China, could become a heavier weight on growth."