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Consumers' conservative financial behavior suggests modest economic growth for the remainder of the year, though the housing industry appears to be gaining momentum, according to Fannie Mae's Economic and Strategic Research Group's May 2015 Economic Outlook released Thursday. Following a weak economic first quarter, continued negative economic fundamentals including a strong U.S. dollar and the lingering effects of last year's oil price decline have resulted in a downgrade in economic growth to 2.3 percent for all of 2015, down by 0.5 percentage points from the prior forecast.
Leading indicators for the housing sector have shown that despite the moderate economic growth predicted, housing may experience a strong season in the spring. Leading housing indicators that show a strong season may be ahead are pending home sales, which increased in March for the third consecutive month, and purchase mortgage apps, which in early May jumped to their highest level in nearly two years. Strong home price gains have helped to improve equity positions and loan performance, and the early-stage delinquency rate for single-family mortgage loans declined to their lowest level since 1972, indicating an improvement in the current quality of outstanding mortgage debt and tightening labor market conditions.
The Federal Housing Finance Agency announced Thursday that Fannie Mae and Freddie Mac will issue new operational and financial eligibility requirements for all current and potential single-family mortgage sellers and servicers. The operational requirements will go into effect on August 18, 2015, for Freddie Mac and September 1, 2015, for Fannie Mae. The effective date for the updated financial requirements for both GSEs is December 31, 2015.
