Fannie Mae Predicts Economic Slowdown And Possible Recession In 2024

Fannie Mae's Economic and Strategic Research Group is predicting that economic growth will likely decelerate and result in a mild recession in 2024. 

The ESR group says that with employment slowing there will be a corresponding decrease in consumer consumption, but that home sales will decline further this year and bottom out in early 2024. 

"Regardless of whether the economy manages a soft landing or enters a mild recession, the ESR Group forecasts mortgage rates in 2024 to retreat from their recent highs and average 6.8 percent by the fourth quarter. As such, the ESR group expects home sales to begin to increase modestly over 2024 but to remain constrained by the likely persistence of the so-called 'lock-in effect' and the low supply of homes for sale," the group said in a press release.

The good news, the group says, is that rates are projected to continue to fall. The latest commentary predicts that the economy will return to growth in 2025.

October data from the National Association of Realtors revealed a 4.1% decline in existing home sales compared to September, with a seasonally adjusted annual rate of 3.79 million. In comparison to October 2022, existing home sales experienced a significant 14.6% drop from 4.44 million.

Fannie Mae's projections indicate that Q4 seasonally adjusted existing home sales are expected to reach 3.9 million on an annualized basis, their lowest since Q3 2010.

The total home sales forecast indicates approximately 4.8 million in 2023, followed by 4.7 million in 2024, and an uptick to 5.3 million in 2025.