There’s been a little seasonal cyclical pickup in housing activity recently, as spring and summer sales are generally stronger than fall and winter, but leading indicators point to housing sales bouncing near the bottom at least through the end of 2012.
Economic growth is expected to be no greater than 2 percent through the end of 2012, which according to Fannie Mae’s Economics & Mortgage Market Analysis Group, this is a growth rate that makes the economy extremely vulnerable to any external shock that could trigger a downturn.
The uncertainty surrounding the degree of domestic fiscal austerity, in addition to external factors, including the scheduled expiration of various tax cuts and unemployment benefits will determine how fast the economy will grow.
Home prices are a key factor for any positive movement in the housing market, and the large inventory of distressed homes working their way through the market is putting downward pressure on prices. Now that we are entering a traditionally weak seasonal sales period, home prices are expected to show renewed declines after firming for several months.
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