The housing market remains unexpectedly strong, according to the latest outlook from Fannie Mae’s Economic and Strategic Research Group. The group’s monthly forecast notes that buyer demand and home prices have shown resilience in the wake of last year’s mortgage rate hikes. Partly, that resilience is due to the still lower-than-normal number of homes for sale. The inventory of available existing homes for sale is low, which helps support home prices – even when demand dips. Demand, though, has largely persisted. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says home buyers’ response to affordability conditions gives the group confidence housing can help cushion expected economic volatility. “The greater-than-expected resilience in the housing sector to the affordability pressures of higher home prices and mortgage rates is central to our expectation that the recession will be modest,” Duncan said. “However, the rapid response of hopeful homeowners to periodic declines in mortgage rates, even from the currently higher rates, gives us additional confidence in our use of the word ‘modest.’” (source)
