Fannie Mae Says Sales Higher in 2012

Fannie Mae released a forecast Friday that said home sales will improve this year. Sales of new and existing homes are likely to increase 3.5 percent according to the report. It says that this increase will contribute “modestly” to economic expansion after acting as a drag on growth since 2006.

“With an expected improvement in housing activity in 2012, residential investment should start contributing to growth, albeit only modestly initially,” Douglas Duncan, Fannie Mae’s chief economist, and Orawin Velz, a director in its Economics and Mortgage Market Analysis group wrote.

In an interview with Bloomberg News, Duncan said that the housing market has been held back by weak demand as high unemployment and concerns about job security prevent buyers from taking advantage of falling home prices and borrowing costs.

The report also says that mortgage rates will continue to provide support for the market, rising only slightly in 2012. The average rate for a 30-year fixed loan fell to 3.89 percent in the week ended yesterday, the lowest in records dating to 1971.

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