Fannie Mae economists have downgraded their expectations for the U.S. housing market in the second half of this year, even though they are more optimistic about the prospects for overall economic growth.

The economy grew faster than anticipated in the second quarter, prompting Fannie Mae’s Economic and Strategic Research Group to boost its U.S. gross domestic product (GDP) projection to an average of 3 percent for the last six months of the year. But housing will not be the driver of growth it was previously expected to be, the group said.

“(O)ur view of the housing market has deteriorated as housing activity appeared to have lost momentum at the end of the second quarter,” Fannie Mae economists said in a monthly economic outlook.

Existing-home sales rose in the second quarter, but they were not enough to overcome decreases in the first quarter or bring total existing-home sales for the first half of the year up to last year’s levels. Pending home sales declined in June and purchase mortgage applications fell 14 percent year over year in July. Fewer permits for single-family homes were issued in the first six months of this year than in the first half of 2013.

“With respect to housing’s contribution to growth this year, we have downgraded our outlook following the disappointing housing activity seen during the first half of the year,” said Fannie Mae Chief Economist Doug Duncan in a statement.

“The impact on mortgage rates from the market’s expectation that the Federal Reserve would soon start tapering their securities purchases, combined to some degree with the weather effect in the first half of 2014, led to very little seasonal growth in housing.

“Additionally, on the demand side, there appears to be a conservatism among consumers and their willingness to take on big-ticket purchases, such as homes. We currently estimate that 2014 will finish lower in total sales figures than 2013 — and that 2015, while stronger than 2013 and 2014, will not be the breakout year some are expecting.”

The mortgage giant now expects total home sales to drop 3.2 percent in 2014 to 5.3 million, before rising 6 percent in 2015 to 5.7 million. That’s a decline from a 1 percent decrease in 2014 and a 7 percent increase in 2015 projected in July. The latest forecast anticipates existing-home sales will fall by 3.5 percent this year to 4.9 million, and rise 4.6 percent next year to 5.1 million.

New-home sales, previously projected to rise by double digits in 2014, are now expected to remain virtually flat, rising 0.6 percent to 431,000. Fannie Mae economists predict they will rise by 21 percent in 2015 to 523,000.

The median price for an existing home is expected to jump 5.1 percent this year to $207,000, before rising by 4.8 percent in 2015 to $217,000.

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