Things are looking up for the housing market, even as the rest
of the economy appears to be bogging down.
Construction of single-family homes is up 20 percent compared to
this same time last year, while home sales are up by 9 percent for
the same period. Meanwhile, residential investment is expected to
contribute to economic growth for the first time since 2005,
according to a new
Overall, the economy appears to be slowing down slightly,
although modest growth is still expected. Fannie Mae now expects
that 2012 will show an increase of 2.0 percent in the nation's
gross domestic product, down from 2.2 percent previously
Weakening consumer spending, a drop in consumer confidence,
reduced hiring and ongoing concerns over the European debt crisis
were cited as factors in the revised outlook.
Economy slows, housing picks up
"The data from the past month collectively point to decelerating
economic growth, but growth nonetheless," said Fannie Mae Chief
Economist Doug Duncan. "…However, despite signs of deteriorating
momentum for economic activity, housing continues to be a bright
spot as news from the housing market has been relatively upbeat,
presenting a rare upside boost to the economy."
Homeowners are showing greater confidence that housing prices
will rise in the next 12 months, according to Fannie Mae's June
National Housing Survey, while the share of consumers polled who
said they would buy a home if they were to move increased by 6
percentage points compared to last year.
Looking ahead, Fannie Mae does not expect mortgage rates to sink
much further than the current record lows of about 3.6 percent on
30-year fixed-rate loans. A small increase is likely over the
coming months, according to the Fannie Mae forecast, with an
average rate of 3.8 percent predicted by year's end.
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