“Notwithstanding the recent mortgage rate rally, housing and mortgage markets will enter 2024 at approximately the same level as they entered 2023,” Fannie Mae chief economist Doug Duncan said in the report. “Therefore, while we expect home sales to begin increasing in the new year, the combination of modestly rising home prices and still-high interest rates suggest that the recovery will be slow from the low levels of housing activity seen recently.”
The group’s broader economic forecast remains mixed. They predict a slight downturn in 2024, followed by a resurgence in 2025. These projections are influenced by the same business cycle dynamics that played a role in last year’s recessionary trends.
“Last week’s comments by chairman Powell, as well as the Federal Reserve’s updated Summary of Economic Projections, suggest increased Fed confidence that a soft landing has been achieved and inflation is headed sustainably to 2%,” Duncan said.
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Duncan acknowledged that many economic forecasts, including Fannie Mae’s, which predicted a recession in 2023, were incorrect. Despite this, he expressed ongoing concerns.
