"With data pointing to soft economic conditions and the fiscal policy debate hanging in the balance we expect growth in the current quarter to moderate from the pace seen last quarter" says Fannie Mae Chief Economist Doug Duncan. "On the bright side the housing market has stayed resilient and continues to show signs of a strong sustained recovery. Mortgage rates remain close to historic lows and home sales and home prices are trending positively. For the first time since 2005 residential investment is poised to contribute to annual economic growth this year albeit on a small scale."
"Despite unsteady macroeconomic conditions we anticipate housing and mortgage activity to gain momentum in 2013" continues Duncan. "As expected the Federal Open Market Committee's action last week shifts monetary policy into cruise control as long as the unemployment rate remains elevated and inflation stays under control. We expect mortgage rates to remain low next year continuing to support the housing market. Total home sales should increase by approximately 8 percent in 2013 following an estimated 10 percent rise in 2012. Although home prices have dipped during the seasonally weak fall and winter seasons year-over-year gains have strengthened significantly above 2011 levels and we expect that trend to continue in coming years."
For an audio synopsis of the December 2012 Economic Outlook listen to the podcast on the Economic & Strategic Research site at www.fanniemae.com.