Despite lower expectations for the economy's progress as a whole this quarter, home sale and price trends suggest housing finally represents "a tailwind to growth," according to a monthly economic outlook released today by Fannie Mae's Economic & Strategic Research Group.
"The housing market has turned the corner and a sustained recovery is under way," the report said, despite some significant challenges that remain ahead, including tight lending conditions, uncertainty surrounding mortgage regulations, and the fiscal cliff.
Home prices have seen strengthening year-over-year gains over the last several months and prices are expected to end the year on a positive note for the first time in six years, Fannie Mae economists said.
They projected the median price of an existing home would rise 4.2 percent on an annual basis in 2012, to $173,000. They expected the median price of a new home to increase 4 percent, to $236,000. Fannie Mae is projecting that median prices of both new and existing homes will rise an additional 1.7 percent in 2013.
Existing-home sales, new-home sales and single-family housing starts are expected to see substantial increases from last year. Fannie Mae predicts each will rise 9.6 percent, 19.5 percent and 25.7 percent, respectively, in 2012 compared to 2011. The mortgage giant expects further improvement next year with increases of 6.4 percent, 21.9 percent and 22.4 percent, respectively.
After falling to record lows this year, mortgage rates are expected to fall even further next year, boosting housing demand. Rates for a 30-year fixed-rate mortgage are projected to average 3.7 percent this year and decline to 3.4 percent in 2013 as a result of the Federal Reserve's continued efforts to keep a lid on interest rates.
For information on Marco Island Real Estate contact me at 239-404-7471 or visit my website at www.RealEstateonMarco.com
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