Dive Brief:
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Fannie Mae said Thursday it expects sales of new and existing homes to hit an eight-year high this year, revising an earlier forecast slightly upward.
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The mid-year forecast came one day after the National Association of Realtors reported that sales of existing homes reached their highest point in June since 2006, and the Mortgage Bankers Association predicted applications for home purchases would top $800 billion both this year and next.
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Fannie Mae Chief Economist Doug Duncan said in a statement that strong sales, lean inventories and rising confidence for the rest of the year have set the stage for increased homebuilding activity.
Dive Insight:
Mortgage Banking Association economists agreed with Duncan’s assessment. “The housing market recovery has shifted to a higher gear,” they wrote in MBA's July Economic and Mortgage Finance Commentary. And they said mortgage rates, which they anticipate will hit 4.5% by year’s end, will be no match for the impact of a strengthening job market on homebuyers.
In fact, Fannie Mae’s report noted, some of the surge in home sales is a reaction to the threat of rising interest rates as buyers hurry to lock in today’s lower rates before the increase comes.
And the report pointed out two ongoing hurdles to the housing recovery: tight credit standards that are preventing some lower-income, first-time homebuyers from qualifying for mortgages; and an increasingly strong demand for rental housing.