Fannie Mae reports 2011 will end on an economic high note

Fannie Mae's Economics and Mortgage Market Analysis Group recently reported that the economic activity in the fourth quarter of 2011 indicates the year will end on a positive note.

The economy has grown more than 2.5 percent, 140,000 private sector jobs were added in November and the fourth quarter has seen slight improvements in the housing market, the report states.

However, the group warns the continued European sovereign debt crisis and volatile financial markets will continue to provide obstacles for the U.S. economy to overcome through the first half of 2012. Even with some stronger numbers in the housing market, a recovery is not expected in 2012.

"Despite recent near-term improvement, the housing market will likely remain subdued next year - a reflection of the winter season, an expected slowdown in economic activity, and a potential increase in distressed sales," said Fannie Mae chief economist Doug Duncan.

According to the Mortgage bankers Association, prospective homebuyers believe now is a good time to buy as prices are very low and mortgage rates are even lower. But potential sellers do not believe it is a good climate for selling a home, as most buyers will haggle down prices. The MBA reports that seller sentiment in the United States is at a historic low. Prices are one factor, but the large inventory of distressed properties in the market that are dragging down home values is a significant factor to the low sentiment.

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