Fannie Mae now sees US home sales drop, not rise

Fannie Mae now sees US home sales drop, not rise

Postby admin » Thu Sep 16, 2010 5:17 am

Fannie Mae now sees US home sales drop, not rise

Fannie Mae (FNMA.OB), the largest U.S. mortgage funding company, on Wednesday sharply cut its forecast for annual home sales following weaker-than-expected activity in the second quarter.

The company is predicting total U.S. sales of new and existing homes in 2010 will drop 7.4 percent from 2009, compared with expectations for a 0.8 percent rise in its forecast last month. It means sales would fall to about 5.12 million homes from 5.53 million units in 2009.

The revision comes after a string of "grim" housing data following the expiration of federal tax credits for first-time home buyers, Fannie Mae economists, led by Doug Duncan, said in a monthly note. The decline in sales was also reflected in a drop in construction spending, which suggested housing would be a bigger-than-expected drag on the U.S. economy, they said.

"We expect residential investment to subtract from economic growth this year for the fifth consecutive year," they said. This is "an unusual phenomenon compared with past economic recoveries when housing acted as a strong boost."

http://www.reuters.com/article/idUSN1515312920100915
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