Spring Activity Cools Following Exceptionally Warm Winter
Housing Shows Some Improvement in Both Consumer Attitudes and Activity
Moderate Economic Growth Expected for 2012
WASHINGTON, May 17, 2012 /PRNewswire/ -- Housing activity indicated a promising start for the first quarter of 2012 that substantially outpaced performance during the same period last year. However, the monthly pattern suggests some loss of momentum late in the quarter. According to Fannie Mae's (OTC Bulletin Board: FNMA) Economic & Strategic Research Group, a slowdown in momentum may be mirroring many economic indicators and may partly be the result of unusually warm weather at the start of the year that pulled some activity forward.
"Despite the loss of momentum as we move through the spring months, we expect that home sales will rise slightly more than 7 percent during 2012," said Fannie Mae Chief Economist Doug Duncan. "Our outlook is bolstered by improvements in consumer sentiment seen in our National Housing Survey results, which show that consumer views of housing market conditions have become more supportive of home purchases and their outlook on home prices. Interestingly, we're seeing a pick up from depressed levels in the 'good time to sell' category, suggesting rising optimism about the housing market."
Economic growth slowed in the first quarter of 2012 to 2.2 percent at an annualized rate, down from 3.0 percent in the fourth quarter of 2011. While still modest, the recent pace of growth is stronger than the same time last year and accompanied by a better balance of upside and downside risks compared to a year ago. Consumer spending was the primary driver of growth, posting the best showing since the end of 2010. However, while the strength in consumer spending is encouraging, it will likely be unsustainable going into the current quarter due to the lack of income support. Overall, incoming data suggest that growth will continue to be sluggish in the current quarter, and the pace of activity should firm just slightly in the second half of the year. For all of 2012, we expect growth to come in at 2.3 percent—little changed from the view we have held since the beginning of the year.
For an audio synopsis of the May 2012 Economic Outlook, listen to the podcast on the Economic & Strategic Research site at www.fanniemae.com. Visit the site to read the full May 2012 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, Housing Forecast, and Multifamily Market Commentary.
Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economic & Strategic Research (ESR) 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 ESR 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 ESR 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 purchasing or guaranteeing mortgage loans originated by mortgage bankers and other lenders so that they may lend to home buyers. Our job is to help those who house America.
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