Things may start looking up for the U.S. housing market in 2011, according to Fannie Mae in its December 2010 Economic Outlook report.
Hope for the new year is very welcome as it’s no secret that this year’s mortgage statistics were disappointing at best. Fannie Mae reports that mortgage origination for all of 2010 is expected to fall to $1.53 trillion from roughly $1.92 trillion in 2009. Refinances are predicted to make up 66 percent of all new mortgage loans this past year, but with mortgage rates beginning to climb and likely to continue on that path, Fannie predicts that refinance loans will drop to 42 percent of the $1.13 trillion of mortgage loans expected in 2011.
“Despite rising mortgage rates, our forecast for home sales is stronger than the previous forecast, given our brighter economic growth and labor market outlook,” said Fannie Mae Chief Economist Doug Duncan. “We expect modest increases in home sales, despite recent interest rate rises, due in part to modest additional declines in home prices, and we expect people to take advantage of affordability as their employment and income outlook brightens.”
What’s more, Fannie cites positive movement from the broader economy that will help to improve the housing market. Because of greater consumer confidence and spending, as well as falling unemployment claims this month, Fannie Mae’s economists believe
“that economic growth is poised to kick into higher gear, with an above-par performance lurking just around the corner-by the second quarter of 2011. For all of 2011, we expect growth of 3.4 percent, compared with a projected 2.9 percent in the previous forecast.”
There are definitely some real threats to increased prosperity next year though, including China’s potential inflation issues, financial unrest in Europe and our own country’s unimpressive recent employment record, but all in all Fannie expects total home sales to rise about five percent in 2011 from this past year.