There is a lot of optimism in the economic forecast released by the Mortgage Bankers Association (MBA) on Monday, but a lot of realism too.
The association expects economic growth to continue for the rest of this year but to slow down again during the first half of the next. The MBA says real GDP which will be a negative 0.5 percent in 2009 despite gains in the second half of the year will rise to about 3 percent in 2010
While many forecasters are saying that employment is improving, MBA sees unemployment continuing to climb, reaching 10 percent from the current 9.8 percent by the end of the year and peaking at 10.2 percent before it begins to decline at the midpoint of 2010.
The forecast projects that mortgage rates will remain stable at around 5 percent through the end of the year but will rise to around 5.6 percent by the end of 2010.
The rate of existing home sales this year is expected to be 2 percent higher than in 2008 and will increase another 11.2 percent during 2010. However, new home sales for 2009 will be down by about 18 percent relative to 2008. Sales seemed to have bottomed in the first quarter of 2009 and have been rebounding modestly since. This should improve next year; new home sales should post an increase of around 21 percent from 2009's very low levels.
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