Full-year 2018 economic growth was increased to 3.1 percent, just one-tenth higher than last month’s forecast. Third quarter economic growth came in at a 3.5 percent annualized rate, slowing from 4.2 percent in the second quarter, according to the Fannie Mae Economic and Strategic Research Group forecasts.

Solid third quarter growth was backed by an impressive labor market, an acceleration in both consumer and government spending, and a build-up in private inventories, despite a widening trade deficit that more than offset its positive contribution in the second quarter.

However, according to the November 2018 Economic and Housing Outlook, the Research Group expects full-year 2019 growth to slow to 2.3 percent as the economy contends with higher short-term interest rates and the waning effects of the fiscal stimulus enacted in February 2018. The housing sector is also expected to continue to face challenges despite the strong economy and job market. Ongoing affordability constraints stemming from further home price appreciation and a lack of for-sale inventory will likely remain headwinds for housing through 2018 and into 2019.

“As we proceed through the fourth quarter, we expect growth to slow further but to remain solid at 2.6 percent,” said Doug Duncan, chief economist for Fannie Mae. “Trade remains a downside risk to growth as a strong dollar is likely to contribute to a further widening of the trade gap. While consumer spending growth is expected to moderate from the robust second and third quarters, both business fixed investment and residential fixed investment should pick up. We also expect the economy to continue to receive strong support from government spending, at least in the near term. Looking further ahead, the Bipartisan Budget Act of 2018 should continue to boost growth through the first half of 2019 before it begins to fade, ultimately acting as a drag on the economy in the second half of 2020.”

The current labor market hot streak, however, isn’t strong enough to boost the housing sector. Both new and trade-up home buyers remain discouraged by rising mortgage rates, elevated home prices, and a shortage of available inventory, particularly in the lower tier of the market.

“Market conditions also present a challenge for builders, as higher interest rates are driving up construction costs and tight labor conditions are accelerating the average hourly earnings growth of residential construction workers,” said Duncan. “Given weak housing data over the past month, we lowered our 2018 originations forecast by $11 billion to $1.624 trillion and our 2019 forecast by $21 billion to $1.603 trillion. However, we expect that existing and new home sales will stabilize in 2019 as home price appreciation moderates and mortgage rates begin to stabilize.”

Home sale prices increased 4.5 percent to a median of $297, 200 in October.

That performance is unusual. Home prices have declined from September to October, having fallen by an average of 1 percent between the two months over the previous eight years, according to Redfin. In October 2018, however, prices increased nationally 2.4 percent month over month.

Despite this national increase, just 32 of the 71 largest metro areas the survey monitors realized home price increases from September to October, which suggests that the monthly gain is due to the share of homes selling last month shifting slightly to more expensive areas than individual homes increasing in value.

However, evidence that the market is cooling down can be seen in price drops. In October, 31.3 percent of homes for sale had at least one price drop of more than 1 percent. This is the highest share of price drops on record since Redfin began tracking this metric in 2010, and 6.3 percentage points above last October's level of 25 percent. In Seattle, almost half of homes for sale had price drops, with an average price cut of $27,500, down from more than $30,000 a year earlier.

The number of homes for sale was up 1.3 percent from a year earlier, the highest level of inventory growth since September 2015. National inventory growth continues to be driven by big increases in softening coastal markets like San Jose (110.9%), Seattle (73.2%), San Diego (38.2%), and Boston (17.3%).

The number of homes newly listed in October rose 5.4 percent year over year, but the number of completed home sales continued to sink, dropping 5.7 percent from 2017. Home sales declined in 59 of the 71 largest metro areas that Redfin tracks.

Metro areas like Seattle, San Diego and San Jose, where high home prices mean that rising mortgage rates have the largest effect on affordability, are seeing the biggest increases in inventory coupled with decreasing sales. The biggest sales declines were in some of the most expensive metros, including Seattle (-19.6%), San Diego (-15.7%), and Honolulu(-22.9%).

"An increase in interest rates effectively makes home-buying more expensive because buyers have to pay higher monthly mortgage payments even if the sticker price hasn't changed," said Redfin chief economist Daryl Fairweather. "Some homebuyers are adjusting their price range down, and others are backing out of home-buying entirely, deciding that renting is a better deal. Sellers are now realizing buyer demand isn't what it used to be and are dropping their prices. When buyers and sellers are on the same page, the market moves quickly, but since sellers were slow to react, we've seen a slowdown in the housing market."

Across Redfin metros, the typical home that sold in October went under contract in a median of 43 days, two days faster than last year. This October, 20.3 percent of homes sold above the list price, down from 22.9 percent last October. The share of homes that went under contract within two weeks also fell, from 23.6 percent last October to 21.3 percent this October.

Fannie Mae has launched a supplement to the post-disaster mortgage relief options the company currently offers, such as victims of the fires in California.

Homeowners with a Fannie Mae owned loan whose property is in a FEMA-declared zone are eligible for free assistance from the Disaster Response Network. If the home was not damaged, but the borrower lost his job or his income was reduced, he remains eligible for the program.

"Communities face extraordinary challenges dealing with the impacts of a natural disaster," says Michael Hernandez, vice president for disaster recovery and rebuild for Fannie Mae. "For homeowners, the process can be complex, stressful, and time-consuming. We want to help families regain their personal and financial footing beginning with mortgage relief, but also by helping more broadly to ensure a successful recovery."

Fannie Mae’s Disaster Response Network is a comprehensive case-management service for disaster-affected homeowners whose mortgage loans are backed by the company.

The program provides homeowners broader personalized support to address safety and basic needs, property repairs, employment, and financial recovery—all of which affect a borrower's ability to meet their mortgage obligations.

The Disaster Response Network is operated by Clearpoint Credit Counseling Solutions through their Project Porchlight program. Using a call-center model, staffed by HUD-certified counselors within the U.S., the Disaster Response network will help homeowners navigate the challenging and unfamiliar post-disaster recovery process and will include:

• A comprehensive case assessment and action plan designed to meet the homeowner's needs.
• Assistance in filing FEMA, insurance, and Small Business Administration claims as well as providing additional referrals and resources for disaster recovery and resiliency.
• Tri-party calls with assistance providers and homeowners, plus ongoing counselor-homeowner check-ins to help ensure a successful recovery.
• A web-based platform designed to educate borrowers, provide resources and updates, as well as create a supportive online community of neighbors facing similar challenges.

Hundreds of thousands of coastal homeowners could feel the devastation of rising seas from climate change within just three decades.

Some 386,000 homes today are likely to be at risk of regular flooding by 2050 because of sea-level rise from climate change, under a scenario of unchecked greenhouse gas emissions, according to a new analysis by Zillow and Climate Central. Moderate emissions cuts would reduce that number by about 10 percent. The effects vary locally: Homes in some communities would likely be largely unaffected by midcentury while those in Texas and the Northeast, for example--could suffer far greater flood threats.

Moderate emissions cuts could reduce the number of current homes in at-risk areas to 348,000 by 2050. Because the effects of climate change will worsen over time, the estimates for the year 2100 are far higher: 1.3 million current homes are anticipated to be at risk of regular flooding if emissions are cut moderately, and 2.5 million homes—worth $1.3 trillion—if emissions grow unchecked. As sea levels rise, the intermittent floods that coastal communities now experience on average once a year are projected to reach farther inland than they do today.

Those floods can damage and devalue homes, degrade infrastructure, wash out beaches and more. They also put homeowners, renters and investors in danger of steep personal and financial losses. "This research suggests that the impact of climate change on the lives and pocketbooks of homeowners is closer than you think. For home buyers over the next few years, the impact of climate change will be felt within the span of their 30-year mortgage," said Skylar Olsen, director of economic research and outreach for Zillow.  "Without intervention, hundreds of thousands of coastal homes will experience regular flooding and the damage will cost billions."

Coastal communities will encounter the effects of sea level rise to greatly varying degrees, depending on the local rate of rise, local tides and storms, the potential future development of coastal defenses, the flatness of the landscape and where homes are built within it. Some major coastal cities—including Los Angeles—sit high enough above sea level that the biggest hit, even as far out as 2100, will be to their beaches.

Others will suffer more far-reaching and damaging effects. About 10 percent of homes in Galveston, Texas, and seven percent in Ocean City, Md., are projected to be at risk of at least annual flooding by 2050. By the same year, Hoboken, N.J., and Miami Beach, Fla., could see three-quarters or more of their homes at risk of at least annual flooding, if emissions remain unchecked.

In addition, new homes are still being built at striking rates in areas that face high risks of future flooding. In New Jersey, for example, seven percent of current homes are projected to be in flood-risk zones by 2100, under moderate emissions cuts. But because of ongoing development, 14 percent of the state's homes built from 2010 to 2017 are in the same high-risk areas.

"The combination of Zillow's data with Climate Central's coastal analysis has given us our most detailed picture yet of U.S. homes at risk from rising seas," said Benjamin Strauss, CEO and chief scientist of Climate Central. "And we have discovered that many communities are growing faster in areas facing chronic future floods than they are in higher areas. It's difficult to plan for higher seas if you are busy digging deeper holes."