Housing Recovery to Give U.S. Economy Modest Push in ’12, Fannie Mae Says [View all]
By Prashant Gopal and Jody Shenn - Fri Jan 13 14:00:00 GMT 2012
Enlarge image Housing to Give U.S. Economy Modest Push in ’12
A "sold" sign stands in the front yard of a new home under construction at the Toll Brothers Inc. Photographer: Emile Wamsteker/Bloomberg
Home sales and construction will improve this year, contributing “modestly” to economic expansion after acting as a drag on growth since 2006, according to a Fannie Mae (FNMA) forecast released today.
Sales of new and existing homes are likely to increase 3.5 percent and housing starts are projected to rise 16 percent, fueled by improvement in apartment development and a rebound in single-family house construction, according to the report by Douglas Duncan, Fannie Mae’s chief economist, and Orawin Velz, a director in its Economics and Mortgage Market Analysis group.
“With an expected improvement in housing activity in 2012, residential investment should start contributing to growth, albeit only modestly initially,” Duncan and Velz wrote.
The housing market has been held back by weak demand as high unemployment and concerns about job security prevent buyers from taking advantage of falling home prices and borrowing costs, Duncan said in an interview yesterday at Bloomberg’s New York offices.