Skip to main content

MBA Still Sees Recession In 2nd Half Of 2023

David Krechevsky
May 25, 2023

Monthly update for May forecasts mild recession starting in Q2.

The U.S. economy will experience two consecutive quarters of negative growth this year — one definition of a recession — but the declines will be relatively mild, according to the latest forecast from the Mortgage Bankers Association (MBA).

In its monthly update, released May 19, the MBA said it expects the real gross domestic product (GDP) to decline by 0.6% in the second quarter and by 0.4% in the third quarter of this year. Both rates are reduced from the organization’s forecast in April, when it predicted a 1.2% decline in the second quarter and a 0.5% decline in the third quarter.

While the real GDP declined in two straight quarters in the first two months of 2022 — falling by 1.6% in the first quarter and 0.6% in the second quarter — other economic indicators, including the strong job market, led many economists to say the U.S. economy was not in a recession at that time.

The latest MBA forecast also projects that, despite the efforts of the Federal Reserve to bring annual inflation down to its 2% goal, the rate won’t get close until the consumer price index hits 2.2% YOY in 2025.

There is a sliver of more positive news for the housing industry in the report, in which the MBA revised slightly upward its expectations for mortgage originations for the year. It now projects the total volume of originations for 1- to 4-family homes in 2023 at just under $1.808 trillion, 0.1% more than the $1.806 trillion it projected in April’s forecast. May’s forecast, however, is still below the $1.89 trillion it projected at the start of the year.

Purchase originations were also revised upward, to just under $1.38 trillion from $1.37 trillion in April’s forecast, but refinance loans were revised downward to $428 billion from $432 billion last month.

While small, the slight increase in the MBA’s prediction for mortgage loan origination volume is significant because its projections had fallen in each monthly update this year, in part because of its growing concern over a coming recession.

Even with the slight upward revision, however, if originations do total around $1.8 trillion for the full year, that would represent a nearly 20% decline from 2022.

May 25, 2023
Mortgage Rates Decline After 3 Weekly Increases

The 30-year fixed-rate mortgage averaged 6.71%, down 8 basis points from the previous week.

Jun 08, 2023
A Gloomy Snapshot Of The Housing Market

3 separate reports show low inventory affecting homebuyers’ perceptions.

Jun 08, 2023
Borrowers See 1st YOY Decline In Home Equity Since 2012

The 0.7% YOY decline in Q1 is equal to an average loss of $5,400 per borrower from Q1 2022.

Jun 07, 2023
A Third Of Homebuyers Paying In Cash

Redfin says all-cash home purchases in April hit highest level since 2014.

Jun 07, 2023
Mortgage Applications Drop For 4th Straight Week

Trend continued despite drop in mortgage rates from recent high.

Jun 07, 2023
Gen Z Homebuyers Prefer Utah: Study

LendingTree finds adult members of the generation are now first-time buyers.

Jun 06, 2023