The authenticity of this year's recovery may still be in question, but according to ""Freddie Mac's Economic and Housing Market Outlook"":http://www.freddiemac.com/news/finance/docs/Oct_2012_public_outlook.pdf for October, the housing sector is showing strength unmatched in previous years.[IMAGE]
Over the past several years, housing has either hurt or done little to help GDP, even though historically, housing tends to lead ""macroeconomic expansion,"" according to the report.
""However, now we're seeing housing resuming its traditional role of leading the recovery charge and once again being the bright spot in the economy,"" said Frank Nothaft, VP and chief economist for Freddie Mac.
Based on residential fixed investment (RFI) growth, which Freddie Mac explained is the component of GDP that includes expenditures on new housing construction, additions and alterations to the existing housing stock, and broker commissions on property sales, the tide appears to be turning for housing.
According to the report, RFI was a ""net drag"" on GDP growth during 2006-2010, and in 2011, it contributed less than one-tenth of a percentage point to GDP growth.
But, in the first half of this year, RFI added 0.3 percentage points to GDP growth of 1.7 percent. Freddie Mac expects to see to see this trend continue into the remainder of the year.
""With QE3 in motion we should see even more pick-up in housing activity thereby providing greater benefits to the overall economy and consumers looking to refinance or purchase a home,"" Nothaft added.
With the Fed's stimulus encouraging low mortgage rates, Freddie Mac expects the low-rate environment to continue into the next year, with the 30-year fixed-rate mortgage averaging around 3.5 percent.
Low rates also prompted the GSE to project 7 million borrowers who will refinance this year, leading to an aggregate of $15 billion in mortgage payment savings over the first 12 months after refinancing.
In addition, Freddie Mac anticipates volume for single-family originations will come close to $2 trillion, a 30 percent increase from last year. However, volume is expected to drop by 15 to 20 percent in 2013 if mortgage rates rise and HARP expires.