Fannie Mae’s Economic and Strategic Research Group releases a monthly outlook covering its expectations for the economy and housing market. In its most recent release, the group revised its forecast for home sales through the end of the year, predicting fewer than before. But with mortgage rates falling and the inventory of homes for sale rising, the news has been good for buyers. So why the revision? Mark Palim, Fannie Mae’s vice president and deputy chief economist, says home buyers remain reluctant. “On its face, the lower rate environment should be good for home sales by helping loosen the grip of the so-called ‘lock-in effect,’ in addition to aiding affordability more generally,” Palim said. “However, high-frequency data, such as mortgage applications, home showing requests, and listings views, suggest that many potential home buyers remain reluctant to make the jump.” Whether home buyers are moved to make the jump in the weeks ahead will help determine what the market looks like as it heads into fall. (source)
