Fannie Mae: Housing to be Bright Spot in 2019 Economy
December 14, 2018
Fannie Mae Chief Economist Doug Duncan is predicting a slowdown in U.S. economic growth for 2019, with the housing market as being among the brighter spots in what could be a challenging new year.
"We expect full-year 2018 economic growth to come in at 3.1 percent—an expansion high—before slowing markedly to 2.3 percent in 2019 and 1.6 percent in 2020," said Duncan. "Fading fiscal policy, worsening net exports, and moderating business investment all contribute to our projection that GDP growth will begin to slow in 2019."
Duncan cited business fixed income growth could be constrained if the ongoing concerns regarding President Trump’s tariff policies continue to create agitation. Duncan also predicted a new Federal Reserve hike for this month and two more in 2019.
As for the housing market, Duncan forecast a stabilizing in mortgage rates and home sales in the new year, with rising purchase mortgage originations and declining refinancing volume.
“If mortgage rates trend sideways next year, as we anticipate, and home price appreciation continues to moderate, improving affordability should breathe some life into the housing market,” he added. “We also expect residential fixed investment to resume a positive growth trajectory amid continued rising housing starts and stabilizing home sales. However, affordability is likely to remain an industry concern, particularly among first-time homebuyers.”
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