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Is Housing Market Optimism Here To Stay?

The housing market has been through some ups-and-downs over the past year. A booming market began to slow down early in 2022, as mortgage rates climbed and caused affordability challenges for buyers. Last fall, though, mortgage rates started to decline and the drop caused housing market optimism to rise. Add to that unexpectedly strong economic data and some were feeling that the worst may be over. But according to Fannie Mae's Economic and Strategic Research Group – which releases a monthly outlook detailing their expectations for the general economy and housing market – it may be too soon to declare market volatility a thing of the past. Doug Duncan, Fannie Mae's senior vice president and chief economist, says recent data has been encouraging but it could reverse. “Recent data have been stronger than expected in ways that we believe are likely to lead to tighter monetary policy with attendant increases in interest rates,” Duncan said. “While optimism appears to have crept into the housing sector, it represents an increase from very low levels of activity and is at risk of declining again if rates reverse.”



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