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Housing Slowdown To Continue Due To Fed Policy

Fannie Mae's Economic and Strategic Research Group releases a forecast each month detailing the group's view of where the housing market and broader economy are headed. In September, the group's outlook sees economic growth resuming in the second half of the year, but calls for the housing market's slowdown to continue as the Fed fights inflation with higher interest rates. Doug Duncan, Fannie Mae's senior vice president and chief economist, says that fight will likely continue into 2023. “In our view, the recent interest rate surge is due to the market's recognition of two critical factors: that inflation is indeed not transitory, and that, to tame it, the Federal Reserve will need to be resolute, even at the risk of possible recession,” Duncan said. “That said, the rise in rates is having the Fed's desired effect on housing, as house price growth began to slow in June. We expect the slowdown in housing to continue through 2023.”