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Fannie Mae’s Economic and Strategic Research Group (ESR) released its September 2017 Economic and Housing Outlook, which includes monthly updates on economic development, economic forecast, multifamily market commentary, and housing forecast.
This month, the economic developments report revealed an improved Q2 estimate in real gross domestic product (GDP) growth, which helped push the full-year growth forecast higher despite increased economic uncertainty following the recent natural disasters.
“For the first time in 2017, we have increased our full-year growth outlook. The upgrade reflects economic activity gaining momentum at the end of the second quarter, though we see a great deal of uncertainty surrounding the forecast,” said Doug Duncan, Chief Economist of Fannie Mae. “The list of uncertainties now extends beyond the geopolitical and legislative, as the effects of Hurricanes Harvey and Irma will require time to untangle.”
Duncan explained that historically when a natural disaster hits highly populated areas it has led to, “substantial near-term declines in economic activity, but rebounds in subsequent quarters due to rebuilding efforts.”
In addition, the ESR Group’s economic forecast predicts a growth of 2.2 percent in 2017, up from the previous estimate of 2 percent, due to greater strength in consumer spending and nonresidential investment in the second quarter.
According to the group’s, multifamily market commentary, the ongoing increase in multifamily asking rents over the past several years has prompted many renters to seek lower cost housing alternatives, including renting factory-built homes located in a Manufactured Housing Community (MHC).
The group’s housing forecast outlook reveals that trends started Q3 off on a weak note as, “both existing and new home sales reached year-to-date lows and leading indicators pointed to further softening.” The group also expects the Fed to “taper the balance sheet later this month,” as continued softness in inflation could sideline the next Fed rate increase until 2018.
