Fannie Mae reduces projected 2022 GDP to 1.3%

Fannie expects slowdown in home sales for Q2, Q3 in 2022

Fannie Mae said the economy is slowing faster than previously expected as markets adjust to the Federal Reserve’s tightening monetary policy and are unlikely to result in a “soft landing.” 

“Uncertainty continues to weigh heavily on markets, with geopolitical risks rising as the Russian war on Ukraine extends into its third month,” said Doug Duncan, senior vice president and chief economist at Fannie Mae, in a statement. “The impact to prices of expected reductions in agricultural production, as well as continued increases in house prices, suggest to us a difficult path for the Fed to return inflation to its two-percent target rate in a timely manner – and, of course, in the absence of an economic downturn.”

While its expectations of the economy having a modest recession in the second half of 2023 remain unchanged, Fannie Mae said the constrained consumer spending power amid elevated inflation and a rapidly rising rate environment carries the risk of a contraction happening sooner.

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Biden’s plan to fix housing supply depends on Congress

The government will expand sweeteners and reduce regulatory hurdles to encourage more development

The Biden administration today unveiled a plan that it says will “help close” the housing supply gap, which one 2021 tally put at 1.5 million homes, in five years.

The government would not build any houses. Instead, it will expand sweeteners and reduce regulatory hurdles so that the private sector will produce the needed homes. The plan is in addition to measures the federal government announced in September 2021 that the federal government said would create 100,000 homes in three years.

Portions of Biden’s housing plan rely on provisions that are stalled in Congress, but could be resurrected through budget reconciliation. One measure would expand existing federal subsidies for multifamily housing development. Another would hand out federal tax credits for developing or rehabbing homes for owner-occupants instead of large investors, making available 125,000 homes for low- and middle-income homebuyers.

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The current challenges to increasing the homeownership

gap

Reflections from National Fair Housing Month

Three recent reports released by the National Association of Realtors (NAR) Research Group were highlighted in talking points for members to use for their Hill visits with members of Congress. These reports highlight the difference home buyers and potential home buyers have when embarking on the buying process. 

While the homeownership rate in the U.S. has increased overall throughout the pandemic, this is not the same for all Americans. The homeownership rate for Black Americans has actually declined between 2010 and 2020 and stands at 43.4%, while the homeownership rate for white Americans is 72.1%. For Asian Americans the rate is 61.7% and for Hispanic Americans it is 51.1%. 

In February, NAR in partnership with Realtor.com released The Double Trouble of the Housing Market report. The report used real time listing data to show the limited housing inventory and the repercussions to home buyers. By using real time inventory data, and stratifying by income, the report highlights that for a household who earns $75,000 to $100,000 they have 411,000 fewer homes available for sale compared to pre-pandemic.

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