FNMA Outlook for 2015

Federal National Mortgage Association ("FNMA" or "Fannie Mae") recently released its outlook for the economy and housing in calendar year 2015.  There are some differences between the FNMA outlooks and the housing and economic outlook that was published by FHLMC and reported in my recent post entitled, "Predictions for 2015".  FNMA predicts overall increases for the gross domestic product, personal incomes and that the unemployment rate will drop.  As for housing, FNMA is indicating that housing starts will rise, new and existing SFR sales will increase, median price of SFR will increase, mortgage lending interest rates will nudge up slightly, and mortgage originations will fall.  The general press release put out by FNMA can be found here.  The housing outlook is here, and the economic outlook is here.

FNMA is not quite as wordy about their outlook as FHLMC as the outlooks from FNMA are basically data in the form of charts without much explanation behind the numbers.  Generally speaking they do see 2015 as being slightly better than 2014 and that slow growth will continue.  They do have some components increasing in the first half of the year to a peak and then slowly diminishing in the second half of the year, which they see as the pattern for 2014.

As for their actual numbers, FNMA predicts GDP increasing by 2.5% (overall economic growth), an increase in the CPI of 1.7% (inflation rate), and the unemployment rate dropping to 5.7% by year-end.  With respect to housing, the FNMA outlook indicates an increase in SFR new home starts of 23.3%, sales of new SFR up 17.7%, existing SFR sales increasing 4.3% and an overall increase in sales of SFRs of 5.4%, and an increase in the median price of a SFR by 4.9%.  As for the lending side of housing, FNMA predicts the mortgage lending interest rate to rise to only 4.3%, but sees more than a 7% drop in overall originations.  Purchase originations will increase but not by a number sufficient enough to offset the fall in refinance originations.

Interestingly, both FNMA and FHLMC are indicating that mortgage originations will fall overall in 2015.  However, the Mortgage Bankers Association is projecting a 7% increase in originations.  A report on the MBA outlook can be found here.