Slightly Upgraded Forecast for Economic Activity in 2011
2010 Expected to Mark Bottom of Annual Total Home Sales
New Multifamily Market Commentary Available
WASHINGTON, DC – November 18, 2010 – (RealEstateRama) — Improving financial conditions and recent encouraging signs from the labor market should set the stage for an above-par growth trend by mid 2011, according to the November 2010 Economic Outlook released today by Fannie Mae’s (FNMA/OTC) Economics & Mortgage Market Analysis Group. Despite challenges, including uncertainty on the domestic fiscal policy and international fronts, improvement in economic activity will likely occur at a gradual pace moving into 2011. The economy showed a slight pickup in growth in the third quarter to 2.0 percent at an annualized pace, up from 1.7 percent in the previous quarter, and consumer spending posted the best showing since the end of 2006. Even with stronger than expected economic growth in the third quarter, the group forecasts continued sluggish growth at least through the first quarter of 2011.
Foreclosure issues are expected to keep home sales subdued in the final quarter of 2010 but the group expects to see a gradual improvement in 2011. “For all of 2010, total home sales are projected to decline by about 8 percent from 2009, marking the bottom of annual total home sales in this cycle,” said Fannie Mae Chief Economist Doug Duncan. “We expect home sales to increase by about 3 percent in 2011. However, the pace of recovery will largely be determined by labor conditions. If hiring improves at a faster pace than expected, home sales will likely see a stronger gain in 2011 and vice versa.”
For an audio synopsis of the November 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 November 2010 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, and Housing Forecast.
New this month and 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.
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.
Fannie Mae exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America’s secondary mortgage market to enhance the liquidity of the mortgage market by providing funds to mortgage bankers and other lenders so that they may lend to home buyers. Our job is to help those who house America.