Daily Archives: July 15, 2020

Economic Growth Expectations Improve Slightly, Remain Tied to Broader COVID-19 Recovery

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Housing Demonstrates Resilience, Expected to Grow Significantly in Third Quarter

Washington, D.C. – July 14, 2020 (PRNewswire) A faster-than-expected pace of recovery in the second quarter contributed to an improvement in expectations for full-year 2020 economic growth, according to the latest commentary from the Fannie Mae (OTCQB: FNMA) Economic and Strategic Research (ESR) Group. Despite the recent resurgence in COVID-19 cases – and the potential for localized measures that may slow otherwise re-opening economies – the ESR Group upgraded its forecast for 2020 annual growth to negative 4.2 percent, compared to last month’s forecast of negative 5.4 percent. Incoming data suggest that the recovery in consumer spending was stronger than anticipated in May and that it likely carried forward much of that momentum into June. The ESR Group also noted that housing continues to show remarkable strength and upwardly revised its home sales, home price growth, and purchase mortgage origination forecasts accordingly. Residential fixed investment is now expected to grow significantly in the third quarter before pulling back in the latter part of 2020.

“Our base scenario for the economy improved but did not shift dramatically from last month; we now expect full-year 2020 GDP to decline 4.2 percent before growing in 2021 by 4.0 percent,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “Incoming data have improved, but coronavirus infections have spiked as well. Restaurant reservations may have flattened due to virus transmission concerns, but gasoline purchases have risen as many Americans are opting to drive – rather than fly – to their summer vacation destinations, illustrating in part the recovery’s unevenness to date. On the housing front, we marked up existing home sales by about 200,000 for all of 2020, which contributed to an upward revision of expected purchase mortgage origination volumes of around $40 billion this year. We think existing home sales’ strength will largely be dictated by inventory constraints and will depend in large part on current owners re-gaining the confidence to list their homes. Additionally, the continued decline in mortgage rates pushed up our refinance volume forecast by about $100 billion. At the current mortgage rate, we estimate that nearly 60 percent of all outstanding loan balances have at least a half-percentage point incentive to refinance.”

The improvement to the ESR Group’s second quarter forecast of real GDP growth was muted in part by a large drawdown in business inventories, ultimately leading to a prediction of a 34.8 percent drop compared to the 37.0 percent predicted last month. Looking ahead to the third quarter, given the higher levels of consumption and the likelihood that any further inventory drawdowns will be less severe, the ESR Group also improved its forecast for third quarter growth by 7.9 percentage points to 27.4 percent. Overall, the anticipated recovery path remains “swoosh”-shaped, as the economy is expected to transition from a rapid to a more modest rate of growth, but those expectations remain subject to upward or downward revision based on the trajectory of the COVID-19 pandemic and its impact on the national economy.

Visit the Economic & Strategic Research site at fanniemae.com to read the full July 2020 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, Housing Forecast, and Multifamily Market Commentary. To receive e-mail updates with other housing market research from Fannie Mae’s Economic & Strategic Research Group, please click here.

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Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of Americans. We partner with lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the home buying process easier, while reducing costs and risk. To learn more, visit:
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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, including assumptions about the duration and magnitude of shutdowns and social distancing, 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.

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No Bargains in Sight as Home Prices Show Little Impact from Coronavirus

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– Sale price growth has slowed slightly, but Zillow expects it will re-accelerate soon

– The median sale price in the U.S. was $263,408 in May, up 4.6% year over year. That’s down from 5.5% annual growth in March.

– A resurgence of high-end listings, few price cuts, and record-low days on market are expected to cause sale prices to accelerate in the coming months.

– Sale price growth slowed the most from April to May in Providence and Charlotte, and increased the most in San Jose and Indianapolis.

Seattle, WA – July 15, 2020 (PRNewswire) Home prices are showing resilience against the coronavirus pandemic, a new Zillow® analysis shows. Sale price growth has cooled slightly, but looks to be headed for an upswing in the coming months — unwelcome news for buyers expecting to score a bargain amid the uncertain economic landscape. 

The median price of U.S. homes sold in May was $263,408, up 4.6% year over year. But May marked the second consecutive month in which the annual growth rate slowed from the month prior, down from 5.3% year-over-year growth in April. That comes after a year of near-continuous acceleration that peaked at 5.5% year-over-year growth in March.

The slowdown can be attributed to the change in the types of homes on the market. In April, new listings of the most-expensive homes dropped the furthest and fastest, while affordable listings were less affected. As a result, year-over-year growth in the median list price slowed from 4% in the last week of March to 1.1% in early May. Sales on many of those homes likely closed in May, which would tilt the composition of sales toward more-affordable homes, and ultimately lower the median sale price.

Recent data suggest sale price growth is likely to reverse course soon. New listings of high-end homes have surged, raising the median list price accordingly — list prices were up 4.3% annually as of early July, and have grown 5.8% just in the past two months. Buyers are outnumbering sellers, causing homes to typically sell just 20 days after hitting the market — the lowest level ever recorded by Zillow — and allowing sellers to confidently hold firm on their asking prices, with only 4.1% of active listings in the last week of June having undergone a price cut. These upward pressures on prices are likely to shine through in sale price data in coming months. 

“As surprising as it might have seemed at the time, sellers who forged ahead with listing their homes this spring were richly rewarded, when buyers buoyed by record-low mortgage rates flooded their listings with offers,” said Jeff Tucker, Zillow economist. “Now, word is getting out that the housing market is on solid ground, so more listings are belatedly rushing to market, extending the busy spring shopping season well into summer. The huge Millennial first-time home-buying wave is still cresting, pushing demand above what’s still very limited supply, so sellers are likely to find eager buyers for months or even years to come.”

The median sale price was up from a year earlier in each of the 50 largest U.S. metros. Price growth was highest in Indianapolis (+11.8% year over year) and Salt Lake City (+9.8%), and lowest in Las Vegas (+0.8%) and San Francisco (+1.3%). 

But annual sale price growth slowed from April to May in most large metros — 31 of the top 50. The biggest slowdowns were in Providence (down 2 percentage points) and Charlotte (down 1.9 percentage points). San Jose (up 2.1 percentage points) and Indianapolis (up 1.4 percentage points) had the steepest accelerations. 

Metropolitan Area*Median Sale Price –
May 2020		YoY Growth, Median
Sale Price – May 2020		YoY Growth, Median
Sale Price – April 2020
United States$263,4084.6%5.3%
New York, NY$428,7336.3%5.4%
Los Angeles-Long Beach-Anaheim, CA$667,8063.5%4.6%
Chicago, IL$242,3734.1%4.1%
Dallas-Fort Worth, TX$278,6474.2%5.5%
Philadelphia, PA$257,6285.2%5.0%
Houston, TX$247,4633.2%4.0%
Washington, DC$423,0833.5%3.6%
Miami-Fort Lauderdale, FL$305,5018.4%8.0%
Atlanta, GA$264,7986.7%6.8%
Boston, MA$482,7827.3%7.6%
San Francisco, CA$808,4881.3%2.7%
Detroit, MI$197,5716.0%7.6%
Riverside, CA$383,0683.8%3.9%
Phoenix, AZ$306,8208.0%8.9%
Seattle, WA$501,9894.4%6.0%
Minneapolis-St. Paul, MN$286,7714.9%5.1%
San Diego, CA$601,1963.5%3.4%
St. Louis, MO$193,2584.9%4.2%
Tampa, FL$241,0117.0%6.1%
Baltimore, MD$302,9672.7%2.8%
Denver, CO$432,1533.9%4.3%
Pittsburgh, PA$178,5294.1%3.5%
Portland, OR$410,9003.7%4.6%
Charlotte, NC$265,5234.0%5.9%
Sacramento, CA$425,0683.4%4.1%
San Antonio, TX$239,3225.4%5.6%
Orlando, FL$268,7645.9%5.4%
Cincinnati, OH$192,1736.3%6.0%
Cleveland, OH$161,0518.3%8.2%
Kansas City, MO$232,7307.0%7.4%
Las Vegas, NV$301,9540.8%-0.1%
Columbus, OH$211,4872.2%3.2%
Indianapolis, IN$204,37311.8%10.4%
San Jose, CA$1,075,5105.3%3.2%
Austin, TX$331,2325.4%6.7%
Virginia Beach, VA$254,7713.3%4.3%
Nashville, TN$300,3003.6%3.9%
Providence, RI$300,1657.1%9.2%
Milwaukee, WI$235,5754.9%6.5%
Jacksonville, FL$254,0382.0%2.9%
Memphis, TN$192,6986.3%7.2%
Oklahoma City, OK$190,1114.7%3.4%
Louisville, KY$196,9845.0%4.1%
Hartford, CT$235,0056.2%6.9%
Richmond, VA$262,0993.0%3.6%
New Orleans, LA$218,4657.7%8.1%
Buffalo, NY$171,0956.6%6.3%
Raleigh, NC$295,0012.2%1.4%
Birmingham, AL$216,4997.4%7.2%
Salt Lake City, UT$357,7969.8%10.1%
*Table ordered by market size 

About Zillow
Zillow, the top real estate website in the U.S., is building an on-demand real estate experience. Whether selling, buying, renting or financing, customers can turn to Zillow’s businesses to find and get into their next home with speed, certainty and ease.

In addition to for-sale and rental listings, Zillow Offers buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Home Loans, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase.

Millions of people visit Zillow Group sites every month to start their home search, and now they can rely on Zillow to help them finish it — with the same confidence, ease and empowerment they’ve come to expect from real estate’s most trusted brand.

Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z and ZG) and headquartered in Seattle.

Zillow and Zillow Offers are registered trademarks of Zillow, Inc.

SOURCE Zillow