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Economic growth is on track to reach 2.6 percent in the second half of the year, according to Fannie Mae’s Economic & Strategic Research (ESR) Group’s September 2016 Economic and Housing Outlook. For the entire year, the ESR Group is forecasting 1.8 percent growth; the first half of the year only saw one percent growth.
Furthermore, the ESR Group is predicting that consumer and government spending are expected to drive growth despite an ongoing slowdown consumer activity. Fannie Mae Chief Economist Doug Duncan expected nonresidential fixed investment to reverse the trend of the past three quarters and “post a modest increase” in the third quarter while residential investment declines for the second consecutive quarter.
“A bright spot for housing market activity is the strengthening of new home sales, which is significantly outperforming activity in recent years,” said Duncan. “The share of new home sales that are under construction or not started has climbed to nearly 70 percent, improving the outlook for single-family homebuilding. Existing home sales underperformed 2015 for the first time in July, however year-to-date sales are still 2.6 percent higher than during the same period last year. Additionally, the share of for-rent multifamily building starts has trended up with recent trends in homebuilding activity favoring the rental market.”