Sustained recovery in housing remains elusive: Fannie Mae
The economy is expected to pick up speed after suffering through a volatile winter period, but a sustained recovery in the housing sector remains elusive as distressed home sales continue to dominant a large part of the sector's activity, Fannie Mae said in its May 2011 Economic Outlook report. Single-family homebuilding activity was weak in the first quarter, while housing starts and new home sales remained flat at already depressed levels, suggesting a state of optimism in the housing sector of the economy is difficult to maintain. The economy slowed dramatically in the first quarter, dipping to a growth rate of 1.8% from 3.1% in the final quarter of 2010. Despite that drop, Fannie Mae's long-term economic forecasts predict more than 3% growth in the next few years. Fannie's Chief Economist Doug Duncan said despite low prices, low interest rates and improving job numbers, consumer attitudes have yet to rebound in a way that turns the tide. "In spite of the positives surrounding the housing market, we see that consumers are still hesitant to take on a large financial obligation. Nevertheless, we do forecast some improvement in home sales over the course of 2011 compared to 2010," Duncan said. Write to: Kerri Panchuk.