For the housing market, and the mortgage industry, it will get worse before it gets better.That’s a point from a group of economists fannie mae who their weather About 2022 home sales this week.
“Housing has clearly continued its downward trend and has been going on for several months now. Rising oversized home prices Doug Duncan, chief economist at Fannie Mae, said in a statement that mortgage rates were rising significantly and rapidly.
Fannie Mae’s Economics and Strategy Research Group expects total home sales to fall 16.2% in 2022, down from the projected 15.6% decline in July.
The latest forecast predicts it will grow from $4.47 trillion in 2021 to $2.47 trillion in 2022. The mortgage market is projected to decline even further in 2023, down to $2.29 trillion.
The brutal housing market is already testing business models for mortgage lenders and it will take some time before things improve. Lost $82 per loanaccording to Mortgage Bankers AssociationCombining both production and service operations, only 57% of companies in the MBA report were profitable in the second quarter.
IMB average production volume in the second quarter was $705 million, down from $808 million in the prior quarter. IMB gross production income, which includes fee income, net secondary marking income and warehouse spreads, decreased to 335 bps in the second quarter from 350 bps in the previous quarter. Production revenue per loan decreased slightly from $10,861 per loan in the first quarter to $10,855 per loan in the second quarter.
many lenders cut hundreds and thousands of staff Amid the drop in origination volume.
Fannie Mae’s forecasters nevertheless mortgage interest rate After settling at a low 5% over the past month, recent data have led to revisions to home sales forecasts, particularly due to lower new home sales.
New home sales hit 590,000 units in June, the slowest sales pace since April 2020. ESR Group researchers now expect annual new home sales to fall to 632,000 units, down from last month’s forecast of 668,000 units. New home sales are now projected to fall 18% from last year, while existing home sales are projected to fall 16% to 5.143 million in 2022.
Fannie Mae’s ESR Group also said it expects full-year 2022 and full-year 2023 real gross domestic product growth to be flat at 0.0% and -0.4% from last month.
“Continued projections of negative real GDP growth beyond 2023 are due to tighter monetary policy weighing on business and housing investment, and persistently high inflation,” Fannie Mae said in a report. This is due to the compounding effects of what is weighing on private consumption,” he said.
ESR Group writes that it expects inflation It will gradually decrease to 7.2% by the end of 2022 and 1.8% by the end of 2023.