Drop in Home Sales Underscores Fragile Recovery According to Fannie Mae's Economic & Mortgage Market Analysis Group

Consumer Spending Shows Promise Despite Low Levels of Consumer Confidence

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Mar 17, 2010, 09:35 ET

WASHINGTON, March 17 /PRNewswire-FirstCall/ -- Housing activity is expected to rebound later this year but at a slower pace than previously projected according to the March 2010 Economic Outlook released today by Fannie Mae's (NYSE: FNM) Economics & Mortgage Market Analysis Group. A surprising drop in new and existing home sales disappointed, but the setback is viewed as temporary with gains expected in the second quarter then trending up on a sustainable basis by year end. The outlook continues to call for moderate economic growth of 3.0 percent for 2010, as the labor market appears poised to create jobs, the service sector shows improvement, and consumer spending joins in as part of the economic storyline. Consumer spending grew a solid 0.3 percent in January, suggesting a pickup in the first quarter despite the possibility of a slow down in February.

"The recent growth in consumer spending is a positive sign for first quarter gains. However, anxiety over job and income prospects continues to weigh on consumer confidence which will likely lead to moderate spending growth in the coming quarters," said Fannie Mae Chief Economist Doug Duncan. "Strengthening growth in the service sector and more favorable financial conditions overall keep us optimistic that we are moving forward with the recovery, albeit at a lower trajectory than previously forecast."

The Economic Outlook includes the Economic Developments commentary, Economic Forecast, and Housing Forecast -- which detail movement of interest rates, the housing market, the mortgage market, and the overall economic climate. To read the full March 2010 Economic Outlook, visit the Economics & Mortgage Market Analysis site at www.fanniemae.com.

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economics & Mortgage Market Analysis (EMMA) group included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. Although the EMMA group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the EMMA group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

Fannie Mae exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America's secondary mortgage market to enhance the liquidity of the mortgage market by providing funds to mortgage bankers and other lenders so that they may lend to home buyers. Our job is to help those who house America.

SOURCE Fannie Mae