Dec 11, 2012

Fannie Freshens its Forecast Following Strong Home Sales

Strong reports on sales of new and existing homes encouraged Fannie Mae to increase its sales forecasts for 2012 and 2013 modestly, though sales next year are still project to rise at a slower rate than they will this year.

Fannie’s economists upped their estimates for total homes sales in 2012 from 4,981,000 to 5,013,000 in 2012 and from 5,191,000 to 5,297,000 in 2013.  Total yearly home sales haven’t exceeded 5 million since 2010.  The new forecast would put total sales in 2012 9.8 percent higher than in 2011.

New home sales would rise 22.3 percent this year and 20.7 percent next year under the new forecast.  Existing home sales would increase 8.9 percent this year and 4.4 percent next year.

“Recent data continue to point to a gradually strengthening housing recovery. Both existing and new home sales posted gains in the third quarter from the second quarter, and the year-over-year home sales price rate saw the largest increase since 2006 at 5 percent. Contrary to the past six years, during which the housing market created a drag on economic growth, housing is expected to contribute to GDP this year with an additional increase in 2013. However, as it accounts currently for only 2.5 percent of GDP, such growth isn’t likely to provide a substantial boost to the economic recovery,” said Fannie Mae’s monthly housing outlook.

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