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As per Fannie Mae’s Economic and Housing Outlook of this month, in the second half of 2021, consumer spending and supply chains will be greatly impacted on the US economy.
Fannie Mae today in a statement announced that the full-year 2021 real GDP growth forecast had been amended due to COVID-related disruptions.
The revision is also due to a weaker second-quarter GDP reading which is 6.3% this month compared to last month’s 7.0%.
For the mortgage industry, Fannie Mae’s Economic and Strategic Research (ESR) Group reduced its forecast for single-family home sales because of ongoing inventory and supply chain constraints.
Because the rate of new sale listings was quite low to sustain the current sales rate the current months’ supply came at the lowest ever reading at 2.6.
The full-year projected figure was revised to 6.66 million from last month’s projection of 6.71 million home sales. Which is still a 3.1% increase from last year. Fannie Mae’s forecast for new construction is 16.9% higher than 2020.
Fannie Mae’s deputy chief economist Mark Palim cited the purchase sentiment index, saying that potential buyers were discouraged due to high property prices and to add to it was the lack of inventory.
A hope that with increased vaccination rate, there would lead more people to put their house on the market also did not materialize.
Palim said the recent surge due to the Delta variant is further affecting consumer behavior. Another factor impacting the economy is if consumers are ready to spend.
Reference Source: MPA
