Fannie Mae Predicts Dark Days Ahead For The Housing Market
Fannie Mae predicts things will get worse for the housing market and mortgage industry before it gets better. A group of economists at Fannie Mae slashed their forecast for 2022 home sales this week.
Fannie Mae’s Economic and Strategic Research Group expects total home sales to decrease 16.2% in 2022. The group revised their grim prediction from July’s projected drop of just 15.6%.
The latest forecast also projects total mortgage origination activity at $2.47 trillion in 2022. This is down from $4.47 trillion in 2021. Fannie Mae also says they expect to see the mortgage market drop to $2.29 trillion 2023.
A brutal housing market has already tested the business models of mortgage lenders. Economists say it will be a while before conditions improve.
On average, Internet and Mobile Banks generated $705 million in origination volume in the second quarter. This down from $808 million in the previous quarter. Total production revenue for IMBs decreased to 335 bps in the second quarter, down from 350 bps a quarter prior. This translates to a $10,855 per loan decrease in the second quarter. This is down slightly from $10,861 per loan in the first quarter.
Many lenders have been cutting hundreds or thousands of staffers amid the dip in origination volume.
Fannie Mae forecasters said recent incoming data has led them to revising the home sales forecast.
New homes sold at an annualized pace of 590,000 units in June, the lowest sales pace since April 2020. Researchers expect new home sales to finish the year at 632,000 units. This is down from 668,000 in last month’s forecast.
Fannie Mae is predicting home sales are projected to fall 18% and existing home sales are expected to fall by 16% in 2022.