WASHINGTON, Jan. 22, 2015 /PRNewswire/ -- Driven by
strengthening private domestic demand, economic growth is expected
to accelerate modestly this year and drag last year's unspectacular
housing activity upward, according to Fannie Mae's (OTC Bulletin
Board: FNMA) Economic & Strategic Research (ESR) Group. Amid
continued low gasoline prices, firming labor market conditions,
rising household net worth, improving consumer and business
confidence, and reduced fiscal headwinds, the economy is expected
to climb to 3.1 percent in 2015, up from the Group's estimate of
2.7 percent in the prior forecast. The stronger economic backdrop
should lead to improving income prospects, underpinning a higher
rate of household formation in 2015.
"Our theme for the year, Economy Drags Housing Upward,
implies that both housing and the economy will pick up some speed
in 2015, but that the economy will grow at a faster pace," said
Fannie Mae Chief Economist Doug
Duncan. "We have revised upward our full-year economic
growth forecast to 3.1 percent for 2015, which is not yet robust
but still an improvement over last year's growth. Consumer spending
should continue to strengthen due in large part to lower gas
prices, giving further support to auto sales and manufacturing. We
believe this will motivate the Federal Reserve to begin measures to
normalize monetary policy in the third quarter of this year,
continuing at a cautiously steady pace into 2016 and 2017, likely
keeping interest rates relatively low for some time."
"Strength in the broader economy, accompanied by continued
employment growth and meaningful income growth, should contribute
to some improvement in housing activity this year," said Duncan.
"Given historically low mortgage rates and a gradual easing of
lending standards, our forecast calls for a 5.8 percent increase in
total home sales for the year. Most of that is likely to come from
growth in existing home sales, but we expect the rising share of
new home sales to lead to a healthy increase in single-family
construction of about 19 percent, or 765,000 units. Although we
don't view this as signaling a breakout year for housing, we do
expect to see broad-based improvement in 2015 following a
disappointing and uneven year for the housing recovery in
2014."
Visit the Economic & Strategic Research site at
www.fanniemae.com to read the full January
2015 Economic Outlook, including the Economic Developments
Commentary, Economic Forecast, Housing Forecast, and Multifamily
Market Commentary.
Opinions, analyses, estimates, forecasts, and other views of
Fannie Mae's Economic & Strategic Research (ESR) Group included
in these materials should not be construed as indicating Fannie
Mae's business prospects or expected results, are based on a number
of assumptions, and are subject to change without notice. How this
information affects Fannie Mae will depend on many factors.
Although the ESR Group bases its opinions, analyses, estimates,
forecasts, and other views on information it considers reliable, it
does not guarantee that the information provided in these materials
is accurate, current, or suitable for any particular purpose.
Changes in the assumptions or the information underlying these
views could produce materially different results. The analyses,
opinions, estimates, forecasts, and other views published by the
ESR Group represent the views of that group as of the date
indicated and do not necessarily represent the views of Fannie Mae
or its management.
Fannie Mae enables people to buy, refinance, or rent
homes.
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SOURCE Fannie Mae