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Housing Market Will Stay Flat in 2012: Fannie Mae

Even with a pickup in the general economy, overall growth will remain flat into the New Year, slowing any impact from the housing market and delaying significant changes, according to a think tank internal to ""Fannie Mae"":http://fanniemae.com/portal/index.html.


The mortgage company described circumstances going forward as those vulnerable to weak jobs growth, external shocks from the euro zone, and pickups ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô or drops ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô in consumer spending and confidence.

""We're pleased that third-quarter and early fourth-quarter economic, employment, and housing indicators have been in positive territory, and, most importantly, that there's been no slide back into U.S. recession,"" ""Doug Duncan"":http://www.linkedin.com/pub/doug-duncan/4/212/4b0, Fannie's VP and chief economist, said in a statement.

""Our hope has been that these last few months of positive growth would buy the economy time to shore up a sustainable growth path,"" he added.

In an audio broadcast of the report, he forecasted ""some improvement"" in the third and fourth quarters next year but said that Fannie expects that the economy will slow down in 2012 as a result of auto sales and consumer expenditures.

Troubled euro zone markets continued to weigh down on the forecast, with concerns that bailout packages from more secure and stronger European economies will fail to deliver on debt-ridden countries like Greece, Italy, and others.

""All contribute to significant volatility and concerns about


investments on this side of the economy,"" Duncan said in the broadcast.

He cited a ""flat"" housing market as one reason why the general economy may fail to take off in 2012, calling it ""not enough├â┬ó├óÔÇÜ┬¼├é┬ª to make a significant contribution to economic growth.""

According to Duncan, macroeconomic forces and important indicators underpinning the housing market include towering unemployment and still-anemic jobs growth.

He suggested that monetary policies from the Federal Reserve could help mitigate a slowdown in housing and the economy at large, saying that these could ""keep spreads narrow and rates low.""

""Despite a small numerical pickup in housing activity, the housing market continues to be essentially flat and we do not expect the recent uptick to be a sustained trend,"" he added. ""Consumer sentiment is in a holding pattern at depressed levels. In turn, the likelihood of positive developments in the housing market remains a concern.""

The economic forecast follows a number of other measures of improvement in the economy at large that portray a market just beginning to stabilize but still weak in the wake of the financial crisis.

Earlier this month ""Lender Processing Services"":http://www.lpsvcs.com/Pages/default.aspx released an index showing that home prices fell over October by 3.8 percent year-over-year.

Lending credibility to the analysis, the ""Commerce Department"":http://www.commerce.gov/ reported that the U.S. economy added only 80,000 jobs over October, a gasping buildup from September, which saw more than 100,000 jobs in tow.

Europe saddles the markets in equal measure, with resignations in Greece by former Prime Minister George Papandreous and in Italy former Prime Minister Silvio Berlusconi contributing to investor selloffs on Wall Street.

The two resignations come in the wake of a bailout package, worth trillions of euros, cobbled together by European countries to salvage Greece, Italy, and others ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô which market watchers nonetheless fear will fall through and potentially dissolve their European Union membership in disorderly manner.