Along with his Weekly Economic Commentary, Fannie Mae Vice President and Chief Economist David Berson provides a review of mortgage and economic trends each month in his Monthly Outlook.
Berson's Monthly Outlook is comprised of the Economic and Mortgage Market Developments report -- which details movement of interest rates, the housing market, the mortgage market, and the overall economic climate -- as well as various historical and forecast tables that track and project housing market indicators, residential mortgage originations, secondary mortgage market trends, and more.
Berson's Monthly Outlook also periodically includes a focus article on a particular current issue related to Fannie Mae's business.
Economic activity should pick up a bit over the first half of 2005, but a significantly stronger (or weaker) pace of growth seems unlikely. Housing activity was mixed in December, with starts up sharply and total sales down. January purchase applications, a good leading indicator of sales, fell to the lowest levels in a year. Despite additional tightening by the Fed, long-term interest rates dropped in recent weeks in response to tepid job growth. While the yield curve has flattened sharply, the ARM share has moved only slightly lower, and the level remains higher than can be reasonably explained using our usual models. Although energy prices continue to gyrate (at high average levels), labor costs have remained restrained -- especially for wages and salaries -- helping to contain underlying inflation. Economic growth should continue at modestly above trend rates in 2005, with core inflation edging up and unemployment rates down. The Fed is expected to continue tightening at a measured pace in 2005, but long-term interest rates should rise only modestly. As a result, the yield curve should continue to flatten. Home sales should fall modestly in 2005, after four consecutive record years, while home price gains are projected to slow sharply -- with an increased chance of declines in some areas. Mortgage originations should drop again this year, while MDO growth is projected to slow (but still remain historically strong). David W. Berson & Orawin Velz Fannie Mae Economics