Fannie Mae sees 2012 home sales up 3.5% to 4.74 million
by ANDREW SCOGGIN
Friday, January 13th, 2012, 2:17 pm

The housing sector will likely take incremental steps forward in 2012, though total originations will fall on fewer refinances, according to economists at Fannie Mae.

The second half of the year should outpace the first six months in terms of growth, though fiscal policy and political uncertainty in Washington will likely drive consumer and business activity, the mortgage giant said.

Chief Economist Doug Duncan said positive consumer activity and challenges in housing and the global economy will equate to moderate growth for the year.

"We're entering 2012 with decent momentum, especially on the employment side, which is fostering positive household and consumer behavior," Duncan said in a release. "Unfortunately, we expect this momentum to slow as we move through the first half of the year."

The report released Friday forecast total home sales to increase 3.5% to about 4.74 million in 2012 from 2011 with another 5% gain in 2013 to nearly 5 million. New home sales could jump 10.4% for 2012.

[A 3.5% increase is from 4.6 to 4.75 million. You won't hardly notice the difference but at least we are not loosing ground!]


The Federal Housing Finance Agency home sales price index, excluding refinances, could dip 1.1% for 2012 from a year before, according to the forecast. Economists predicted the 2011 index would finish 4.6% lower than 2010.

[A 1.1% dip is hardly anything as that would be 98.8% of what it was. I expect there is a margin of error of 3% so potentially they could go up 1.9%! I don't know how they determine these predictions, but it is much better than another 10% drop which they were previously forecasting. You can see how volatile these numbers are. Personally, I think it's hard to quantify because you'd need to compare the same (or very similar) house selling for an amount more or less than it did a year before.]

Mortgage originations as dollar volume could see a decline as well in 2012, largely on a steep drop in refinances. The Fannie report said total originations will fall to $1.01 trillion in 2012 from a predicted final 2011 tally of $1.36 trillion. Economists expected refinancing to plummet to $540 billion from $894 billion.

[Did you see how huge the refi business is? $1.01 Trillionin 2012? There is still a lot of strength in this economy!I I'm disappointed they didn't say why originations of refinances would go down--it must be a rate change they are predicting.]

Purchase mortgages, however, will rise to $471 billion in 2012 from a estimated 2011 total of $464, according to the report.

[A steep drop in refinances would be very good for my buyers & sellers. It hurts our business when a loan officer doesn't return calls because he is busy with his refis. This kills transactions by a high factor of approximately 15-20%.]

Total single-family outstanding mortgage debt will likely drop 1.3% to $10.14 trillion in 2012. For the U.S. economy as a whole, Fannie researchers predicted real GDP would increase 3.3% in the fourth quarter to finish the year at 1.7% growth. Economists forecast 2.3% GDP growth for 2012 and 2013.

[That's good news! Thanks for reading......]

Click here for the original article