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Archive for Wednesday, May 7, 2008

Fannie sees price drop

May 7, 2008

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— The outlook for the housing market darkened further Tuesday as the nation's largest buyer of home mortgages said it racked up more than $2 billion in quarterly losses and forecast a steeper drop in home prices this year.

If Fannie Mae's prediction proves true, the real estate woes could further shake the confidence of consumers already stung by rising food and fuel prices, and an anemic job market.

Home foreclosures are accelerating throughout the country, adding to the glut of unsold properties and further depressing prices. As a result, a growing number of homeowners are saddled with loans that outstrip the value of their houses.

"I think that right now we are in the belly of the cycle," Fannie Mae's president and CEO, Daniel Mudd, said during a conference call with analysts.

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