Fannie, Freddie cut housing-market forecasts for 2014 

On the heels of a choppy first quarter, federally controlled mortgage-finance giants Fannie Mae and Freddie Mac have cut their forecasts for the U.S. housing market’s performance in 2014.

Doug Duncan, Fannie’s FNMA chief economist, said Monday that he now expects builders to start construction on 1.05 million housing units this year, down 50,000 from Fannie’s forecast earlier this year. He cited constraints on credit and labor.

“We have downgraded our housing forecast slightly due to a lackluster sales picture, but the recent loss of momentum is likely a temporary one,” Duncan said.

Last week, Freddie cut its forecast for home sales in 2014 to 5.5 million from a prior estimate of 5.6 million.

“Tight inventory may pose a significant challenge for home buyers in many markets across the country, which may result in higher home prices and sales being lower than expected,” said Frank Nothaft, Freddie’s FMCC chief economist.

Markets will get a first look this week at the early spring selling season, as officials release March sales data for new and existing homes. Economists polled by MarketWatch expect to hear that both series remained at lackluster rates last month.

Looking forward, projects and purchases delayed by bad weather could pop up in coming housing reports. While dropping affordability will continue to trim some sales, mortgage rates do remain relatively low, home-price growth is expected to slow down and some banks are easing standards for loans.

(By Ruth Mantell)

Source: marketwatch

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