Fannie Mae economists say they believe home prices “hit bottom” earlier this year and that prices and sales will continue to move up as more consumers enter the housing market.
Economists with the mortgage giant are forecasting about a 9 percent rise in home sales this year, topping out at 4.98 million. They expect home sales to reach 5.19 million next year—a number that hasn’t been reached in years. Fannie Mae is also predicting housing starts to rise: 746,000 this year and 888,000 by 2013.
Still, challenges persist in the housing market’s recovery, Fannie economists note.
“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,” says Doug Duncan, Fannie Mae’s chief economist. “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.”