According to Freddie Mac’s December 2011 U.S. Economic and Housing Market Outlook, 2012 should bring stronger economic growth, a better job market, and an increase in housing activity. Frank Nothaft, Freddie Mac’s chief economist, says the economy grew at a faster pace in the waning months of 2011 due to stronger retail sales, low inventory levels, and increasing non-farm payroll employment. The acceleration of economic growth in the fourth quarter should provide momentum heading into 2012. Nothaft also forecasts a drop in the unemployment rate over the next year. After falling to 8.6 percent in November, the unemployment rate will experience a modest decline in the next year, though it will remain uncomfortably high. Nothaft also forecasts increasing home sales and new construction for the housing market. Low mortgage rates and high affordability will lead to a three-to five-percent sales spike in 2012. Due to the fact that home prices vary depending on local market performance, Freddie Mac’s outlook calls for further gains in markets that are currently appreciating but, in markets with higher vacancy rates and a large number of distressed sales, prices will continue to feel downward pressure. More here.
