A Peek at the National Housing Market

Let’s expand out from our local Forsyth County Real Estate Market and look at the national housing market. The economists at Fannie Mae have released their monthly economic outlook. They report a continued recovery in housing and rising home prices should provide a cushion to economic growth this year, offsetting the hampering effects of tax increases and government spending cuts.

A shortage of inventory lead to home price appreciation at the national scale in 2012 and continuing into 2013. Fannie Mae anticipates existing home prices will rise 5.1 percent this year and 3.8 percent in 2014. Prices for new homes are expected to increase 4.1 percent in 2013. However, higher-than-expected price jumps and continued tight inventory will likely restrain existing-home sales this year and next year, leading Fannie Mae economists to downwardly revise their sales expectations this month.

One of the great benefits of increasing home prices is that it brought more than 1.7 million properties above water in 2012 and will continue to do so this year, Fannie Mae said, freeing many borrowers to put their homes on the market and potentially easing the inventory shortage.

Citing a quarterly home price expectations survey from Zillow, the mortgage giant said home prices will rise an estimated 17.5 percent cumulatively between 2013 and 2016, helping all but the most severely underwater mortgages regain positive equity.

Fannie Mae economists added that 2016 was also the year they expected housing-related activity, including homebuilding and residential construction employment, to return to "normal."

Home price gains should also encourage banks to make more mortgage loans by boosting their confidence that the properties they are lending against will hold their value, Fannie Mae said. Tightened mortgage credit has been one of the final barriers to a return to a normal housing market, Fannie Mae added.

The mortgage giant expects low mortgage rates to continue to support the housing market with the average rate for a 30-year fixed-rate mortgage rising from 3.5 percent in the first quarter to 4 percent in the last three months of this year to 4.4 percent in fourth-quarter 2014.

In general, Fannie Mae expects housing to provide a headwind to the U.S. economy, as it has for the past few quarters.

Editor's Note: Tim Hopkins is a licensed realtor since 2001 and blogger on Cumming Patch.

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