Growth Is Stalling, But Not Stalled According to Fannie Mae’s Economics & Mortgage Market Analysis Group

WASHINGTON, June 20, 2011 -

- Home Prices Continue to
Decline

Prospects for accelerating growth have grown dimmer recently due
to downward revisions of first-quarter economic activity and
slowdowns across a broad set of indicators during May, according to
the June 2011 Economic Outlook released today by Fannie Mae’s (OTC
Bulletin Board: FNMA) Economics & Mortgage Market Analysis
Group. Weakness in economic activities spanning manufacturing,
consumer spending, jobs, and housing has resulted in the group
downgrading projected growth for the current quarter, as well as
for the second half of they year. For 2011, economic growth is
expected to come in at 2.5 percent, down from 2.9 percent in the
previous forecast and more than a full percentage point lower than
the forecast at the beginning of the year.

Elevated inventories continue to put downward pressure on home
prices, continuing the trend that started at the end of the
homebuyer tax credit last summer. The group forecasts that we still
have not seen the bottom for home prices, expecting additional home
price declines through the third quarter before flattening out at
the end of 2011.

“Ultimately, the labor market holds the key to a housing
recovery, but job growth is needed in order to activate housing
demand,” said Fannie Mae Chief Economist Doug Duncan. “Hiring
delays will continue to push out timing for the housing
rebound.”

For an audio synopsis of the June 2011 Economic Outlook, listen
to the podcast on the href="www.fanniemae.com/media/economics/index.jhtml?p=Media&s=Economics+%26+Mortgage+Market+Analysis">
Economics & Mortgage Market Analysis site at href="www.fanniemae.com/">www.fanniemae.com.
Visit the site to read the full June 2011 Economic Outlook,
including the Economic Developments Commentary, Economic Forecast,
and Housing Forecast.

Also available via link from the Economic Developments
Commentary is the Multifamily Market Commentary by Kim Betancourt,
Director, Multifamily Economics and Market Research. The Commentary
provides information on new construction data for the multifamily
and condo sector.

Opinions, analyses, estimates,
forecasts, and other views of Fannie Mae’s Economics & Mortgage
Market Analysis (EMMA) group included in these materials should not
be construed as indicating Fannie Mae’s business prospects or
expected results, are based on a number of assumptions, and are
subject to change without notice. How this information affects
Fannie Mae will depend on many factors. Although the EMMA group
bases its opinions, analyses, estimates, forecasts, and other views
on information it considers reliable, it does not guarantee that
the information provided in these materials is accurate, current,
or suitable for any particular purpose. Changes in the assumptions
or the information underlying these views could produce materially
different results. The analyses, opinions, estimates, forecasts,
and other views published by the EMMA group represent the views of
that group as of the date indicated and do not necessarily
represent the views of Fannie Mae or its management.

Fannie Mae exists to expand affordable housing and bring
global capital to local communities in order to serve the
U.S. housing market. Fannie Mae has a federal charter and
operates in America’s secondary mortgage market to enhance the
liquidity of the mortgage market by providing funds to mortgage
bankers and other lenders so that they may lend to home buyers. Our
job is to help those who house America.

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Pete Bakel, +1-202-752-2034