By Peter Ricci
In the GSE’s latest Economic & Strategic Research Group, participants noted the “continued resilience” of the housing market, and credited it as one of the key contributors to renewed consumer confidence.
Fannie Mae Economic Report – Housing Conditions Strong
A number of areas in the housing market, according to the Fannie Mae economic report, have contributed to its 2012 growth:
- Home prices, the Economic & Strategic Research Group believe, bottomed in early 2012, though they are likely to fall a bit with seasonal declines in winter homebuying.
- Record-low mortgage rates, recently boosted by the QE3 policy from the Federal Reserve, will inspire more consumers to enter the housing market.
- Because of that influx of new prospective homebuyers, total home sales in 2012 (new and existing) should increase by roughly 9 percent over 2011.
- The biggest impact of those low mortgage rates, though, will be the refinancing boom, which Fannie Mae expects will result in $1.8 trillion in overall originations in 2012, a 20 percent increase from 2011.
Doug Duncan – Beware of the Fiscal Cliff
Doug Duncan, Fannie Mae’s chief economist, reiterated many of the Economic & Strategic Research Group’s findings in his comments.
“News from the housing sector is more positive, with various indicators showing continued momentum toward a sustainable, long-term recovery,” he said. “Notably, home prices are inching back into positive territory on a year-over-year basis. Results from our September National Housing Survey also show consumers’ home price change expectations have remained positive for nearly a year.”
However, Duncan was careful to warn about the pending “fiscal cliff,” as the media has labelled Congress’ latest budgetary gridlock, and the substantial damage it could cause on the U.S. economy. And as we’ve written, the fiscal cliff also poses huge challenges to housing; as Duncan said, for the first time in awhile, consumers are finally showing confidence in the housing market, and any extreme sways in the economy could dramatically impact that confidence.