Fannie Mae’s economists expect total home sales to rise approximately 9 percent this year from last year’s depressed levels.
Although home prices are likely to dip somewhat in the winter season following typically stronger spring and summer months, Fannie Mae’s experts still believe that home prices hit bottom earlier this year. Combined with record-low mortgage rates, aided by the Federal Reserve’s latest round of mortgage-backed security purchases, more consumers are likely to enter the housing market, the company said today.
Sales will top out at 4.98 million this year and continue to increase next year, reaching 5.19 million units for the first time in years. Fannie predicts prices will rise 2.9 percent this year and 1.6 percent next year. Housing starts will reach 746,000 this year and rise to 888,000 in 2013.
“The U.S. fiscal cliff and debt ceiling debate as well as the weakened global economic environment are likely to create the strongest headwinds facing any real improvement this year,” said Fannie Mae Chief Economist Doug Duncan. “With these issues hanging in the balance, we believe risks remain tilted to the downside. News from the housing sector is more positive, with various indicators showing continued momentum toward a sustainable, long-term recovery. 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.”