Latest forecast predicts modest downturn for the U.S. economy in 2023, with a rebound in 2024.

Fannie Mae’s forecast for the first time includes the 2024 outlook. Fannie projects real GDP growth in 2024 to be 2.0 percent on a Q4/Q4 basis, reflecting the start of a recovery following an anticipated 2023 contraction of 0.6 percent. They still expect a modest recession to begin in the first quarter of 2023 as the full effects of tightening monetary policy and weaker global growth weigh on the economy. Our projection for 2022 growth is 0.0 percent, up 0.1 percentage points from the previous forecast. For Fannie’s inaugural 2024 home sales forecast, they project total sales of 5.25 million units, up 18.6 percent from our forecast for 2023, reflecting expectations for a modest pullback in mortgage rates and a broader economic recovery, as well as an ongoing housing supply deficit helping drive new home sales. The home sales forecasts for 2022 and 2023 are essentially unchanged from last month at 5.67 million and 4.42 million units, respectively. Home sales are projected to hit a trough in Q2 2023, at a selling pace of 4.27 million annualized units, as the full effect of higher mortgage rates and the projected recession take hold. It should be noted, however, that following the October Consumer Price Index (CPI) report, longer-run interest rates fell by about 30 basis points, suggesting some upside risk to our home sales forecast over the coming quarters. Given the modest changes to our outlook for home sales and mortgage rates, Fannie has slightly increased the forecast for 2022 mortgage originations to $2.34 trillion (previously $2.33 trillion), while lowering the 2023 originations forecast to $1.71 trillion (previously $1.74 trillion). The forecast for 2024 originations is $2.11 trillion.

Source: Fannie Mae