A healthy dose of winter home sales led to a disappointing spring with housing activity cooling somewhat in the latter part of the first quarter, Fannie Mae said Thursday.
Doug Duncan, chief economist for Fannie Mae, said activity levels looked promising in the first quarter due to warm weather wooing buyers off the sidelines. But those activity levels cooled in the latter part of the quarter.
Still, Duncan and Fannie's research team expect home sales to rise 7% in 2012, suggesting ongoing tepid growth in the market.
"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," Duncan said. "Interestingly, we’re seeing a pickup from depressed levels in the good time to sell category, suggesting rising optimism about the housing market."
Duncan says economic growth slowed to 2.2% in the first quarter, down from 3% in the fourth quarter of 2011. Even though consumer spending was the primary force of growth, it's not sustainable with most households lacking true income support, Fannie said.
Overall, there will be economic growth in future quarters, but it will be sluggish in the current quarter until firming in the second half, according to Duncan.