Economic growth produced an annualized growth rate of +3.5% during Q3 2018, according to the Fannie Mae Economic and Strategic Research Group. This +3.5% annualized growth rate was down from +4.2% growth during Q2 2018.
“As we proceed through Q4, we expect growth to slow further but to remain solid at +2.6 %,” said Fannie Mae’s chief economist, Doug Duncan. “Trade remains a downside risk to growth as our strong US dollar is likely to continue to further widen the traditional gap (between countries).”
The ESR Group, an Australian real estate and financial markets expert forecasts that 2019’s full-year growth will slow to 2.3%. ESR sees higher short-term interest rates and the waning effects of the fiscal stimulus as major challenges to global economic growth.
In terms of the US housing market, Fannie Mae’s Duncan sees trouble ahead due to affordability constraints, home price appreciation, lack of affordable housing inventory and increasing home prices.
“Both new and existing trade-up buyers remain discouraged by rising mortgage rates, elevated home prices and the shortage of available inventory, particularly in the lower tier of the market.”
Duncan went on to say “…our market conditions also present real challenges for builders due to higher interest rates driving up construction costs and tight labor conditions accelerating the average hourly earnings growth of residential construction workers.”
Fannie Mae has lowered its 2019 housing market forecast by $21B to $1.603T. However, said Duncan, “we expect existing and new home sales will stabilize in 2019 as home price appreciation moderates and mortgage rates begin to stabilize.”