Home / News / Government / Fannie Mae Releases Forecast on Housing, Economy
Print This Post Print This Post

Fannie Mae Releases Forecast on Housing, Economy

Given improvements seen in housing, ""Fannie Mae"":http://www.fanniemae.com revised its housing forecast higher for 2012 and 2013 in its November economic outlook report.


According to the GSE, the fundamentals are set in place for a ""solid"" housing recovery, such as low interest rates, rising prices, and a labor market that's healing.

Considering these developments in housing, the GSE's Economic & Strategic Research Group anticipates single-family housing starts will jump 25 percent this year, then rise by another 22 percent in 2013.

Existing-home sales should also rise and see a 9 percent increase in 2012 and a 4 percent gain in 2013.

When combining new and existing-home sales, the increase is expected to be 10 percent this year and an additional 6 percent in 2013. And if there's any risk in this forecast, Fannie Mae says it's that housing demand may actually result in stronger housing activity than currently anticipated.


Based on the Federal Housing Finance Agency's purchase-only index, home prices should see an increase of 2.9 percent for the remainder of 2012 and a 1.6 percent increase in 2013.

Fannie Mae was also optimistic about originations and expects originations to reach $1.81 trillion in 2012 and $1.54 trillion in 2013. The refinance share of originations should rise to 71 percent in 2012 before dropping to 62 percent in 2013, according to the report.

The 30-year fixed-rate mortgage is expected to stay low and average 3.5 percent in 2013.
The GSE also expects the Federal Reserve to continue buying $40 billion in mortgage-backed securities (MBS) each month through 2013.

Unemployment is expected to dip further into 2013 and fall to 7.6 percent. GDP is expected to grow at a rate of 2.2 percent in 2013.

Even though reports on the housing sector give reasons to be optimistic, Fannie Mae still warned ""data continue to show a sluggish recovery overall.""

The GSE also noted consumer spending was the largest contributor of growth in Q3. However, consumer confidence may be weakened in coming months due to the the fiscal cliff and debt ceiling debate, which ""are likely to create the most significant barriers to meaningful growth,"" Fannie Mae stated.

In addition, Fannie Mae Chief Economist Doug Duncan cautioned, ""While the pick-up of activity in the third quarter is encouraging, it is compared to the weak pace seen in the second quarter and doesn’t portend a robust recovery in the near term.""

About Author: Esther Cho


Check Also

Homeowners Continue to Face Challenges After the Pandemic

The Consumer Financial Protection Bureau (CFPB) has published a new report examining 16 large mortgage ...

Your Daily Dose of DS News

Get the news you need, when you need it. Subscribe to the Daily Dose of DS News to receive each day’s most important default servicing news and market information, absolutely free of charge.