Housing bulls may think the worst is behind us. There’s a record number of multifamily units under construction, new home sales are rising, and just 16 percent of regional housing markets tracked by Zillow showed home price declines between March and April.

However, one government-sponsored enterprise suggests the housing recession isn’t over.

A revised forecast model by Fannie Mae, or the Federal National Mortgage Association, as it’s less commonly known, predicts the U.S. housing market will help drag the economy into recession, Fortune reported.

That forecast is for a mild correction, not a housing crash, because housing inventory is still low at 40 percent below pre-pandemic levels. The model predicts that national home prices will bottom out in Q4 2024, down 5.28 percent overall from the housing price peak of Q2 2022, with variations regionally.

Fannie Mae describes itself as a buyer of mortgage loans from lenders “who are then able to use those funds to offer mortgage loans to more people.” Under the conservatorship of the Federal Housing Finance Agency (FHFA), Fannie Mae says it helps people “obtain a home and stay in that home when faced with hardship or disaster. ”

With aggressive builder incentives pulling buyers back into the market and mortgage rates falling back below 7 percent as the housing market enters the busy spring season, many regional housing markets have flipped from correction mode to growth mode. 

But the housing recession could regain momentum as the market moves into the slower summer and fall months, according to Fannie Mae.

U.S. housing market activity, as measured by private residential fixed investment — the core of housing GDP — declined four straight quarters through Q1 2023 and more declines could be on the way. Fannie Mae expects residential fixed investment to fall 5.9 percent in Q2 2023, 9.1 percent in Q3, 6.4 percent in Q4, and 1 percent in Q1 2024.

“There is a record number of multifamily units currently under construction, which are scheduled to come online later this year and into 2024. Combined with tightening credit for construction lending, which we expect will soon be realized by a slower new project pipeline, we are expecting a significant slowdown in starts later this year,” Fannie Mae economists wrote in a report Friday.

Over the past year, housing market activity receded while a recession failed to materialize for most of the rest of the economy. The Fannie Mae forecast model predicts declines in the U.S. housing market will spill over and help push the U.S. economy into a mild recession with U.S. GDP declines in Q3 2023 (-1.2 percent), Q4 2023 (-1.7 percent), and Q1 2024 (-0.5 percent).