The housing market should continue its gradual recovery this year but plenty of uncertainty remains, according to economists from the Mortgage Bankers Association.

That uncertainty comes from multiple sources, including the European crisis and Middle East unrest and a fragile domestic jobs market and the looming presidential election.

Friday's jobs numbers, just 115,000 new jobs created in April, further compounds worry, as the number is a steep drop from the more than 200,000 jobs per month the country was hitting several months ago.

"We are looking at this and saying, are we out of the woods?" asked Jay Brinkmann, chief economist for the Mortgage Bankers Association. Brinkmann and Michael Fratantoni, vice president of research and economics for the MBA presented economic data on key drivers for the real estate finance market  during the MBA's secondary conference in New York.

The MBA predicts that the Federal Reserve will keep key interest rates at near zero for the next two years and doesn't anticipate any more quantitative easing during that time. Inflation is tracking a bit above the Fed's targeted rate, and mortgage-to-Treasury spreads have widened.

"Watch the FOMC (Federal Open Market Committee) carefully," said Fratantoni, who predicted the Fed may slow its investments in mortgages over the next few months.

Brinkmann said the Fed's policy of keeping rates low for so long may have unintended consequences that the nation doesn't yet fully comprehend. Already, retirees who have their savings in liquid assets such as certificates of deposits and pension funds are suffering, he said.

On housing, the MBA expects new homes sales to rise 10% in 2012 and existing-home sales to rise 5%, although both improving from already meager numbers.

If prices do rise, pent-up supply could come online — causing further pressure on prices.

"Any significant increase in prices will … result in a new flood of listings from people who have wanted to sell for some time," Fratantoni said.

Originators, meanwhile, could see pressure on their lending numbers as the "low-hanging fruit is already gone" on Home Affordable Refinance Program refinancings. About 30% of the refi market currently involves HARP loans.

The MBA forecasts that total originations will decline to about 1.06 billion in 2012, down from 1.1 billion in 2011.