The nation’s state of economic expansion has reached its ninth consecutive year. According to the Fannie Mae Economic & Strategic Research (ESR) Group’s June 2017 Economic and Housing Outlook, this year’s economy is expected to continue growing at an annual rate of 2 percent. Although last quarter hovered around a growth rate of 1.2 percent, the second quarter is looking at a rate of 2.9 percent to round out the first half of the year.

This jump of 1.7 percent is largely due to a drastic increase in consumer spending. Last quarter, spending remained at .6 percent, but experts predict it to pick up to about 3.1 percent. Although consumer spending is redeeming its title as the largest contributor to economic growth, economists are unsure of how changes in fiscal and monetary policy will affect the market throughout the upcoming months.

“This month marks the eighth anniversary of the U.S. economic expansion, the third-longest of the post-World War II era. While we expect modest growth to continue in 2018, the potential for fiscal stimulus remains a notable wild card,” reported Doug Duncan, Chief Economist of Fannie Mae. “The odds that congress will enact major pieces of legislation this year and jumpstart meaningful fiscal stimulus have diminished, and the economy also faces another fiscal policy uncertainty in coming months, as Congress will have to raise the debt ceiling to avoid a government shutdown. Monetary policy uncertainty also has heightened. As we expected, the Federal Open Market Committee raised the fed funds rate at the June meeting by 25 basis points. Our June forecast assumes that the Fed will increase the target rate once more this year in September and will begin to taper reinvestment of principal payments from its securities holdings in December. However, the recent slowdowns in hiring and inflation could lead the Fed to hold off on the September rate hike in order to gather more data.”

While the exact effects of fiscal and monetary policy changes remain unknown, expectations for the housing market remain unchanged.

“Although we expect mortgage rates to remain supportive for home buyers, our near-term outlook for existing home sales remains cautious,” stated Duncan. “We expect total home sales to rise 3.2 percent this year and total single-family mortgage originations to drop about 21 percent to $1.62 trillion. A large drop in refinance originations will likely outweigh a modest rise in purchase originations. We expect the refinance share to move down to around 34 percent in 2017 from 48 percent in 2016.”

For any homebuyer in the market, following these constant changes in the housing industry and overall economy can be difficult. To stay up-to-date, or to learn more about mortgage financing, contact one of our mortgage specialists today.