Housing Proves to be Silver Lining

By Stevie Duffin Updated on 12/14/2012

By Daniel Duffield

While the year’s economic growth seems to be losing its drive, Fannie Mae expects moderate growth for the second half of the year, indicating that housing will be a silver lining.

In Fannie Mae’s most current report, housing sales have risen by 9% and single-family beginnings have also increased 20% year-over-year. Additionally, in polling consumers who are considering moving, the share of those who would purchase a home increased by 6%, the highest rate recorded in the survey’s two-year existence.

According to Doug Duncan, Fannie Mae chief economist, “the data from the past month collectively point to decelerating economic growth, but growth nonetheless. It's now clear that our bias toward downside risks noted in the June forecast have materialized, pushing down our already modest growth projections. However, despite signs of deteriorating momentum for economic activity, housing continues to be a bright spot as news from the housing market has been relatively upbeat, presenting a rare upside boost to the economy."

Examining the less than exemplary growth levels, these findings have been attributed to to data released in June, which illustrated a decline in hires compared with the monthly average of the first quarter. Coupled with the doubts caused by the European debt crisis and fears of its impact on domestic markets, former optimism about the second half of the year has been slightly dented.

Fannie has currently estimated the 2012 gross domestic product for 2012 to be 2%, reduced from the earlier estimate of 2.2%.

Despite these setbacks, homeowners remain confident; according to the June National Housing Survey, homeowner’s confidence has increased in terms of determining price expectations for next year. Low interest rates have created some hope for consumers, illustrated in the additional 6% of consumers planning to buy a home in the event of moving.