Economist's Commentary: May 5, 2008
Quick Take on the Economy: May 5, 2008
By Lawrence Yun, NAR Chief Economist
Ginnie Mae
- Ginnie Mae's business has soared. The latest six months of activity (the post-credit crunch period) were doubled that of the comparable period the year before.
- Ginnie Mae is the equivalent to Fannie and Freddie, but in relation to FHA and VA loans. The rise in Ginnie implies more people are utilizing safer FHA and VA loans and moving away from subprime loans.
- The market share for FHA loans had historically been about 20 percent before falling to less than 3 percent in 2007. Expect the market share to climb to 15 percent for 2008. The fallout from subprime liquidity squeeze is being cushioned with a greater FHA presence.
ISM - Service Sector
- The Institute for Supply Management (ISM) report on the service sector soared to 52 in April from 49 the prior month. The above 50 reading implies expansion.
- Though the manufacturing sector is declining, the much larger service sector has bounced back nicely according to ISM. Orders for manufactured products rose in March after falling in the past two months.
What does today's data mean for REALTORS® and consumers?
- The economy is surprising on the upside. Certainly, we are likely to avoid any meaningful contraction or recession.
- Job gains could begin to show up within a couple of months.
- A chance of any further rate cut by the Fed is getting slimmer and slimmer by the day.
Daily Forecast Update
- NAR's monthly official forecast as of April 8th
- GDP Q2: 0.7%
- GDP Q3: 2.3%
- Unemployment rate by election time: 5.5%
- Average 30-year fixed mortgage rate in June: 6.2%
- Average 30-year fixed mortgage rate in December: 6.3%
This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >
Comments? Questions? E-mail NAR Research.
NAR members, learn how you can add this commentary to your Web site, blog, or newsletter. Read more >
