Federal National Mortgage Association (PNK:FNMA) Q1 2024 Earnings Call Transcript

Federal National Mortgage Association (PNK:FNMA) Q1 2024 Earnings Call Transcript April 30, 2024

Federal National Mortgage Association beats earnings expectations. Reported EPS is $0.736, expectations were $0.6. FNMA isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day, and welcome to the Fannie Mae First Quarter 2024 Financial Results Conference Call. At this time, I will now turn it over to your host, Pete Bakel, Fannie Mae's Director of External Communications.

Pete Bakel: Hello, and thank you all for joining today's conference call to discuss Fannie Mae's first quarter 2024 financial results. Please note, this call includes forward-looking statements, including statements about Fannie Mae's expectations related to economic and housing market conditions, the future performance of the company's book of business, and the company's business plans and their impact. Future events may turn out to be very different from these statements. The forward-looking statements sections in the company's first quarter 2024 Form 10-Q filed today, and in the risk factors and forward-looking statements sections in the company's 2023, Form 10-K, filed on February 15, 2024, describe factors that may lead to different results.

A portfolio of mortgage-backed securities with a magnifying glass, emphasizing the detail of credit risk management.

A recording of this call may be posted on the company's website. We ask that you do not record this call for public broadcast and that you do not publish any full transcript. I'd now like to turn the call over to Fannie Mae Chief Executive Officer, Priscilla Almodovar; and Fannie Mae Chief Financial Officer, Chryssa Halley.

Priscilla Almodovar: Welcome, and thank you for joining us today. I'll begin this morning by spending a few minutes on the economic environment and then we'll turn it to our financial and mission performance for the first quarter of 2024. After that, our Chief Financial Officer, Chryssa Halley, will discuss our first quarter results in more detail. The US economy in the first quarter continued to grow, but at a slower pace. First quarter GDP was 1.6%. Inflation remained persistent at 3.2%, still above the Federal Reserve's 2% target. The 30-year fixed rate mortgage rate averaged 6.7% during the quarter, compared to 7.3% in the fourth quarter of 2023. Home supply continued to be constrained, and as a result home prices remained strong.

We estimate that home prices rose 1.7% during the quarter. Current interest rates combined with high home prices continued to put pressure on housing affordability. Despite these pressures, consumers seem to be adjusting their expectations on mortgage rates and the home price environment. According to our recent Home Purchase Sentiment Index, consumers are slightly more optimistic about both home buying and home selling conditions. For lenders, overall market single-family mortgage origination activity continued to be sluggish at an estimated $330 billion for the quarter and relatively flat compared to the prior quarter. In multifamily, the market saw property values continue to decline. Nationally, there was slight rent growth of an estimated 25 basis points in the first quarter after rent decline in the prior one.

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