In Q4, Fannie Mae’s net income fell by $1 billion compared to the previous quarter, and its CEO said lower profits for the full year were due to shifting housing market conditions.

In the final quarter of 2022, the government-sponsored enterprise reported net profits of $1.4 billion, a significant drop from the $5.2 billion it reported a year earlier, while its $12.9 billion full-year net income declined by $9 billion over 2021.

According to Fannie Mae, the decline was largely due to the shift of $11.4 billion to credit losses and another $1.6 billion set aside for investment losses, resulting in a $1.4 billion net income for the fourth quarter.

Ahead of Tuesday’s news release, Priscilla Almovodar, CEO, foresaw further economic challenges for US homebuyers in 2023. They expect some economic headwinds in 2023, which will continue to make housing affordability a challenge for many homeowners and renters. She said the results of 2022 reflect a housing market in transition.

A full-year report by the company showed that the enterprise mobilized $684 billion in mortgage liquidity last year, having acquired north of 1.15 million single-family purchase loans and 886,000 single-family refinancing loans over the course of 2022.

After reaping $1.4 billion in investment gains the year before, Fannie lost $297 million last year due to a steep decline in the market value of single-family loans.

Also on the single-family side, the company reported a 55% decline in conventional acquisition volumes (to $614.8 billion), purchase acquisition volumes, and refinance acquisition volumes for the full year, primarily due to the rising rate environment in recent months.

The segment’s new multifamily business volume decreased modestly compared with 2021, with net income of $2.2 billion and revenues of $4.8 billion for the full year.