Fannie Mae's latest housing forecast is in, and it predicts a stagnant mortgage market for the next two years, at about $1 trillion in originations for each of 2012 and 2013. Not what industry officials want to hear, especially after five rocky years starting in 2007.
Those numbers make last year's $1.3 trillion in originations look like a robust year! (It would have been 20 years ago, but not recently.)
Fannie Mae is calling for a declining refinancing market in each of this year's four quarters, despite the help the government's HARP 2.0 program is supposed to engender. And the purchase market is even forecast to dip below $100 billion in the first quarter.
The purchase market should perk up in 2013, according to the Fannie Mae forecast, but won't offset a continuing drop in refinancings. This despite continuing low mortgage rates. Duncan is forecasting the 30-year fixed-rate mortgage to average 3.9% this quarter before rising gradually to 4.3% at the end of 2013.
Housing starts are projected to increase over the next two years, up to almost one million by the end of 2013. New home sales also are seen as rising, to 490,000, and existing home sales to $4.6 million.
Combined, home sales are projected to break the 5 million mark during the third quarter of 2013.
Home price news in the forecast is not good, as both new and existing home prices are projected to be stagnant at $214,000 for new and $164,000 for existing homes. Obviously this forecast projects a continuance of the home price-deflating effects of foreclosures for both this year and next year,
Chief economist Doug Duncan thinks this year will feature a “political” economy dependent on the effects of expiring tax provisions and overseas factors like the continuing financial crisis in the Eurozone. He thinks the overall economy will see “a year of moderate growth,” which should be good for the housing market in the long run.
“Recent data have shown that the economy appeared to gather momentum as the year drew to a close,” Duncan said in his analysis. “Labor market conditions have gradually improved, and consumer confidence has rebounded from its summer plunge.”
But for housing, the word seems to be, wait till 2014.
