However, the GSE is also expecting a Q2 growth rebound – also for the fourth consecutive year – bringing its full-year 2017 growth projection to 2%.
“Once again, our full-year growth forecast remains intact as the economy grinds along, with the prospect of material policy changes appearing to be delayed,” said Fannie Mae chief economist Doug Duncan. “We expect consumer spending to resume its role as the biggest driver of growth in the second quarter amid improvements in the labor market.”
However, before being the driving force for the economy in Q2, consumer spending was actually cited by the Fannie Mae report as the major cause of economic slowdown in Q1 as real consumer spending had the smallest contribution to GDP growth since 2009 at only 0.2 percentage points.
As for the housing market, Q1 growth saw the number of households spike by 1.2 million compared with the previous year, and homeownership rates went up to 63.6%.
Millennials were also at the heart of an increase in homeownership rates as employment opportunities for their age group improved and 25-34 year-olds – the prime age group for first-time homebuyers – are becoming more open to the responsibility of owning a home.
“Positive demographic factors should continue to reshape the housing market, as rising employment and incomes appear to be positively influencing millennial homeownership rates,” Duncan added. “However, the tight supply of homes for sale continues to act as both a boon to home prices and an impediment to affordability.”
Home builders shifting towards millennials
Fannie Mae: Slow growth expected in 2017
Economic growth for the first quarter has slowed for the fourth straight year compared to the fourth quarter of the previous year, according to a report from Fannie Mae.