WASHINGTON, Nov. 20 (Xinhua) -- U.S. housing sector was expected to face challenges despite the current strong economy and job market, the U.S. Federal National Mortgage Association, commonly known as Fannie Mae, said on Tuesday.
"The current labor market hot streak hasn't been enough to boost the housing sector," said Doug Duncan, chief economist of Fannie Mae.
Speaking of the outlook of both U.S. economy and housing sector, Duncan said that Fannie Mae expected the fourth quarter growth to slow further but to stand at an annual rate of 2.6 percent.
For the year ahead, Fannie Mae expected full-year 2019 economic growth in the United States to slow to 2.3 percent as U.S. economy contends with higher short-term interest rates raised by U.S. Federal Reserve, and the weaker effects of the fiscal stimulus resulted from Tax Cuts and Jobs Act of 2017.
"Both new and trade-up home buyers remain discouraged by rising mortgage rates, elevated home prices, and a shortage of available inventory, particularly in the lower tier of the market," said Duncan.
"Market conditions also present a challenge for builders, as higher interest rates are driving up construction costs and tight labor conditions are accelerating the average hourly earnings growth of residential construction workers," Duncan said.
Duncan also noted that Fannie Mae lowered its 2019 mortgage originations forecast by 21 billion U.S. dollars to 1.603 trillion U.S. dollars, due to weak housing data over the past month.
"However, we expect that existing and new home sales will stabilize in 2019 as home price appreciation moderates and mortgage rates begin to stabilize," Duncan added.
Fannie Mae is a U.S. government-sponsored enterprise founded in 1938 during the Great Depression in the United States as part of the New Deal which was introduced by then President Franklin D. Roosevelt. The corporate purchases mortgages from lending institutions in an effort to increase affordable lending activity at those institutions.
