Housing market surge may decrease over time

The housing outlook is still positive, with economists and analysts predicting that this sustainability could last for years.  However, everyone should be aware that housing won’t hold up the nation’s entire economy, as the housing recovery may only be a temporary growth.

In an economic outlook from Fannie Mae, analysts have been commenting that growth will improve this year due to the housing market’s strength, but that as fiscal issues reveal themselves later on in the year, the growth will decrease.

In July 2012, analysts predicted that the housing recovery would lift consumer confidence as well as the second half of the fiscal year.  This coupled with Fannie Mae’s economic outlook is evidence that housing will continue to be lifted in the upcoming future of the nation’s economy.

First-time home purchases were at 117 billion in 2013’s first quarter, but is expected to grow to 179 billion in 2013’s second quarter.  Despite all this growth, the refinance market share is expected to decrease drastically in the next few years.  For example, refinances are expected to make up just over fifty percent of all mortgage transactions in 4Q of this year, and will shrink to thirty-three percent in 4Q of 2013.

First-time home loans are expected to take over the refinance loss, but overall, mortgage originations will be decreasing over the next year.  Analysts believe that the overall economic growth will come from the housing market strength and business investments.  The only restraint in economic activity will be due to tax increases, but that should start increasing in the second half of the year.

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Gretchen Wegrich

Gretchen Wegrich is an editor at Lender411. She specializes in mortgage basics, personal finance and green living. She graduated with a bachelor's degree in writing from University of California, San Diego and previously worked at the Santa Cruz Sentinel. Contact her at gretchen@lender411com.