WASHINGTON (1/20/16)--Relaxed lending standards combined with increased household income and job security headline Fannie Mae’s Economic and Housing Outlook report for this month. In the report, Fannie’s Economic and Strategic Research (ESR) Group focuses on the challenge of housing affordability coupled with expected modest economic growth.
The group expects that further labor market tightening will lead to increased household income and job security amid more relaxed lending standards and easier access to mortgage credit.
However, strong home price gains, especially in the lower-end of the market, continue to outpace household income growth, eroding affordability.
Consumer spending is expected to underpin economic growth again this year, while residential investment and government spending should help drive growth despite some drag from net exports.
Overall, the ESR Group expects the economy to grow 2.2% for all of 2016, with China’s deteriorating economic activity, a stronger dollar, geopolitical turmoil and uncertainty about monetary policy remaining downside risks to the outlook.