Slight growth, but uncertainty remains in housing market

Fannie Mae's Economics and Mortgage Market Analysis Group reported the past few months have shown slight housing market growth compared with the lack of growth seen in the first half of 2011. The group found the economy grew at a 2.5 percent annual rate in the third quarter of 2011, but the United States continues to remain vulnerable to external economic factors and an uncertain U.S. fiscal policy, which suggest a slower economic growth in 2012. The group predicts the total 2011 existing home sales will be very similar to levels seen in 2010, and only a slight increase in 2012.

"Despite a small numerical pickup in housing activity, the housing market continues to be essentially flat and we do not expect the recent uptick to be a sustained trend," said Fannie Mae chief economist Doug Duncan. "Consumer sentiment is in a holding pattern at depressed levels. In turn, the likelihood of positive developments in the housing market remains a concern."

While the group has a weak outlook for housing, the federal government is currently debating the value of the group as well as its parent entities Fannie Mae and Freddie Mac. The Kansas City Star reported that the two mortgage lenders have received $170 billion in taxpayer bailout funding, and Congressional leaders are considering dissolving the agencies to reform the role of the government in the housing market.

However, the source reported that executives running the agencies when they called for the original bailout funds are no longer working at Fannie Mae and Freddie Mac. Thus, adjustments to the regulations and duties associated with the entities may be better received now.

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