While gross domestic product is expected to be negatively impacted by all the uncertainty surrounding the nation's impending debt ceiling debate and the risk of sequestration, the housing sector is expected to continue its upward trajectory, the National Association for Business Economics (NABE) said.

This assertion was promulgated by Nayantara Hensel with the National Defense University; Ken Simonson at Associated General Contractors of America; William Strauss of the Federal Reserve Bank of Chicago; Richard Wobbenkind of the University of Colorado and Clare Zempel of Zempel Strategic.

The participants forecast real residential investment will grow 14.8% in 2013, up from 12% forecasted in the December survey, which is similar to the actual 2012 growth in residential investment. Furthermore, residential investment will lose some of its momentum in 2014, with panelists projecting a 13.4% uptick. 

Additionally, housing starts are expected to increase in 2013 to 0.98 million units and grow to 1.15 million units in 2014, up from 0.78 million units of housing starts in 2012.

Recently, the U.S. Census Bureau and the Department of Housing and Urban Development reported new home starts on private residences fell 8.5% from December to January.

Moreover, the Federal Housing Finance Agency’s home price index is forecasted to grow 3.5% from the fourth quarter of 2012 to the fourth quarter of 2013. The projected home price index in 2014 is expected to grow 4%. 

In regards to the Federal Funds, the panelist expects the target rate will remain at 0.125% and the 10-year Treasury note yield will be at 2.25% in 2013. The 10-year Treasury note yield is also expected to grow in 2014 to 2.75%.

With current debates about sequestration, one-third of the panelists expect it will occur in either partial form, while one-fourth of the panelists project sequestration to occur in full form on March 1.

Furthermore, panelists expect that the federal deficit will reach negative $900 billion in 2013 and negative $761 billion in 2014, down from negative $1 trillion in 2012. 

HUD Secretary Shaun Donovan sent a warning to lawmakers on Feb. 14 during a Senate Appropriations Committee that automatic government spending cuts could result in 75,000 fewer households receiving foreclosure-prevention aid along with rental and counseling services through the agency.

"Much of this damage will be done through cuts to HUD’s Continuum of Care programs, under which formerly homeless families and individuals are quickly re-housed and given other assistance to move them towards self-sufficiency," he said.