Fannie Mae: Economic Growth to Slow, Housing to Strengthen

After rising economic growth in the third quarter, overall economic growth is expected to decline this quarter and in early 2013, according to ""Fannie Mae"":http://www.fanniemae.com/portal/index.html. However, the GSE anticipates further strengthening in the housing market.

Economists at Fannie Mae anticipate economic growth of less than 2 percent for the first half of 2013 followed by more accelerated growth for the remainder of the year.

Factors contributing to the slow-down in economic growth include the effects of Hurricane Sandy, uncertainty regarding the fiscal cliff, the recession in the Euro zone, the sovereign debt crisis, and tensions in the Middle East.

However, while the overall economy remains somewhat dismal, Fannie's economists finds a bright spot in the housing market, which ""has stayed resilient and continues to show signs of a strong, sustained recovery, according to Doug Duncan, Fannie Mae's chief economist.

In fact, Duncan points out that residential investment will likely bolster annual economic growth for the first time since 2005.

""Despite unsteady macroeconomic conditions, we anticipate housing and mortgage activity to gain momentum in 2013,"" Duncan said.

Mortgage rates are low, and home sales and home prices are rising with the exception of a recent seasonal dip during the fall and winter. Fannie Mae expects these overall trends of rising home prices and sales to continue.

Fannie Mae anticipates a 7.5 percent rise in home sales over the course of 2013 after this year's 10.2 percent increase.