Economic Outlook Brightens According to Fannie Mae’s Economics & Mortgage Market Analysis Group

Economic Growth Poised to Kick into Higher Gear by Second Quarter of 2011

WASHINGTON, DC – December 20, 2010 – (RealEstateRama) — Improvements in consumer spending and consumer confidence, increased demand for goods and services, and falling unemployment claims are all positive factors for a brighter outlook as we move into 2011, according to the December 2010 Economic Outlook released today by Fannie Mae’s (FNMA/OTC) Economics & Mortgage Market Analysis Group. Downside risks still exist, however, including a weaker than expected employment report, the ongoing economic turmoil in Europe, and potential inflation problems in China.

For 2011, forecasted growth was upgraded from 2.9 percent to 3.4 percent based on the positives in the recent reports. The forecast anticipates improving labor market conditions, despite the huge disappointment from the November employment report. The housing recovery should gain momentum going into 2011 if the expected stronger labor market materializes.

“Despite rising mortgage rates, our forecast for home sales is stronger than the previous forecast, given our brighter economic growth and labor market outlook,” said Fannie Mae Chief Economist Doug Duncan. “We expect modest increases in home sales, despite recent interest rate rises, due in part to modest additional declines in home prices, and we expect people to take advantage of affordability as their employment and income outlook brightens.”

For an audio synopsis of the December 2010 Economic Outlook, listen to the podcast on the Economics & Mortgage Market Analysis site at www.fanniemae.com. Visit the site to read the full December 2010 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, and Housing Forecast.

Also available via link from the Economic Developments Commentary is a Multifamily Market Commentary by Kim Betancourt, Director, Multifamily Economics and Market Research. The Commentary provides information on current multifamily market conditions. Sales of multifamily properties have been rising all year, and property sales are expected to remain stable in 2011. Location, class, and condition of properties continue to be the greatest decision-making factors for investors.

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae’s Economics & Mortgage Market Analysis (EMMA) group included in these materials should not be construed as indicating Fannie Mae’s business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the EMMA group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the EMMA group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.