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7 ECONOMISTS: HOUSING WILL DRIVE INFLATION INTO 2022 Earlier this year, the Economic and Strategic Research Group at Fannie Mae predicted full-year 2021 real GDP growth at 7%. at expectation remains fairly unchanged in the group's July 2021 commentary; however, they do project significant compositional shifts related to the sources of economic growth. ey expect higher-than-consensus levels of inflation through the end of 2022, a forecast partly due to the expectation that some of the more transitory pressures in the economy will give way to housing-driven inflationary pressure, they say. "Demographic trends remain favorable for a strong housing market over the next few years, and, combined with the chronic undersupply of homes built over the last decade, upward pricing pressure is likely to remain through the forecast horizon—just not at the rate seen this spring," the report reads. "Nevertheless, we expect home price growth to become one of the more persistent drivers of inflation going forward, as other, more transitory factors diminish." ey also significantly upgraded the home price forecast, as measured by the FHFA Purchase-Only Index, to 14.8% annualized in 2021, up from its prior forecast of 8%. However, home purchase demand is expected to soften modestly moving forward, as Mark Palim, Fannie Mae VP and Deputy Chief Economist, explained. "While recent home price growth has been historically high, we're forecasting further home price appreciation to moderate through the remainder of the year and into 2022," Palim said. "On the supply side, we think homebuilders will be able to increase production as supply chain disruptions and labor shortages alleviate, which should add to the inventory of new and existing homes available for sale. On the demand side, we expect the increase in housing demand we saw over the past year to ease, as the impact of unique recent factors lessens, including adjustments to accommodate pandemic-related remote work arrangements, stimulus checks bolstering household savings, and record-low mortgage rates." In addition to its upgraded home price growth projections, the ESR Group also lowered modestly its interest rate forecast. erefore, 2021 mortgage originations are now forecast at $4.2 trillion, up from last month's forecast of $4.1 trillion, with both purchase and refinance origination activity projected to be higher. Somewhat weaker-than-anticipated consumer and construction spending data and an updated federal spending timeline from the Congressional Budget Office led the group to update its forecast to reflect a larger share of growth occurring in the second half of the year. ey say they predict Q2 growth to clock in at 8.1%, down from last month's projected 10.1%, while third and fourth quarter growth projections were revised upward by .7 and 1.2 percentage points, respectively, to 7.1% and 6.6%. ey expect that business inventory investment and government spending will account for an increasing share of near-term economic growth, as spending by consumers shifts toward services and away from goods. Risks to the forecast are weighted to the downside, including future COVID-19 developments, supply chain and labor shortages, and inflation risk. e full July 2021 forecast from Fannie Mae's Economic and Strategic Research Group is available at FannieMae.com. Journal Compiled by the DS News Staff TA K E A L O O K I N S I D E T H E N U M B E R S DATA BITS Source: LendingTree.com I N S I D E T H E J O U R N A L | I N F O S T R E A M | T H E D I G I TA L E D G E | M O V E R S & S H A K E R S Ginnie Mae mortgage-backed securities issuance volume exceeded 70 billion for 12 straight months, as of June 2021's reported 72.45 billion. In mid-July, HUD added more than a dozen new members to a staff Secretary Marcia Fudge has said was about half the size of the department's workforce 30 years ago. 1. KANSAS CITY, MISSOURI 2. LOUISVILLE, KENTUCKY 3. RALEIGH, NORTH CAROLINA 4. CLEVELAND, OHIO 5. CHICAGO, ILLINOIS 6. PHOENIX, ARIZONA 7. INDIANAPOLIS, INDIANA 8. LAS VEGAS, NEVADA 9. PROVIDENCE, RHODE ISLAND 10. NEW YORK, NEW YORK METROS WHERE BORROWERS TAPPING EQUITY SEE SMALLEST CREDIT-SCORE DECLINES 1. ORLANDO, FLORIDA 2. SEATTLE, WASHINGTON 3. NASHVILLE, TENNESSEE 4. BUFFALO, NEW YORK 5. MINNEAPOLIS, MINNESOTA 6. TAMPA, FLORIDA 7. BOSTON, MASSACHUSETTS 8. HOUSTON, TEXAS 9. SAN FRANCISCO, CALIFORNIA 10. BALTIMORE, MARYLAND METROS WHERE BORROWERS TAPPING EQUITY SEE LARGEST CREDIT-SCORE DECLINES RANK CITY RANK CITY President, Finance of America Mortgage Page 26 THE EXCHANGE WITH Bill Dallas

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