Fannie Mae Sees Return to Economic Growth in 2025

Economic growth remains likely to decelerate and ultimately result in a mild recession in 2024, followed by a return to growth in 2025, the Fannie Mae Economic and Strategic Research (ESR) Group said in its November commentary. Although the combination of ongoing employment gains and decelerating inflation has increased the likelihood of a soft landing, the ESR group contends that a downturn remains the most likely outcome.

“The economy is now slowing from the otherwise robust first estimate of third-quarter growth,” said Doug Duncan, Fannie Mae SVP and chief economist. “The slowdown in employment gains has continued, and stress is growing on consumers’ ability to sustain their high levels of spending – unsurprising results that we attribute to the often-lagged economic effect of monetary policy tightening.”

Dunan continued, “Housing has been and continues to be under serious affordability pressure, resulting in recessionary-level home sales activity. While many current owners with low mortgage rates will likely continue to be discouraged from listing their homes, we expect mortgage rates to trend modestly downward in 2024, which should help kickstart a gradual recovery in home sales into 2025.”

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