Each month, Fannie Mae’s Economic and Strategic Research Group releases a forecast covering what they think is ahead for the housing market and economy. According to their March outlook, the group says economic data has started the year off stronger than expected and – while a lot of uncertainty still exists – the housing market is poised to help moderate any potential downturn should one occur in the second half of the year. “While housing writ large has responded to the Fed’s monetary tightening in a relatively predictable fashion, the rapid uptick in home sales in response to modest rate declines earlier this year corroborates our long-standing expectation that the housing sector will help moderate any future recession due to the significant pent-up demand,” Doug Duncan, Fannie Mae’s senior vice president and chief economist, said. In other words, the group believes the Fed will likely slow interest rate increases in the case of a recession. If that happens, lower rates would then help spur buyer demand, which remains significant and ready to move when affordability conditions improve. (source)
