Fannie Mae Lowers GDP Expectations for Q4/Q4 to 6.3% from 7.0%

The Federal National Mortgage Association, commonly known as Fannie Mae, today (8-19-21) revised their forecast for 2021 real gross domestic product (GDP) lower, from 7.0% to 6.3% on a Q4/Q4 basis, with a partial offsetting upgrade to the 2022 expected growth rate to 3.2% from 2.8%. Fannie Mae says the lower projected pace is due in part to a weaker-than-anticipated Q2 2021 GDP figure and in part to a modestly weaker second half outlook.

Fannie Mae also downgraded their home sales forecast for the second half of 2021, driven by a weaker outlook for the sale of new homes, largely due to continued supply constraints impacting homebuilders. This was partially offset by a modest upward revision to existing home sales based on incoming data and the recent decline in mortgage rates. Fannie Mae now expects 2021 total home sales to increase 3.1% from 2020, compared to 3.8% percent in their July forecast.

For new construction, they are forecasting 2021 housing starts to be 16.9% higher than in 2020, down from a 17.7% gain previously. A modest downward revision to single-family starts was partially offset by an upgrade to multifamily construction.

Largely due to a lower interest rate outlook, the 2021 mortgage originations forecast was upgraded to $4.4 trillion, up from $4.2 trillion. Refinance originations accounted for most of the upgrade. Fannie Mae forecast of 2022 originations ticked upward to $3.3 trillion from a prior $3.2 trillion.