NAR economist sees loan rates rising in 2012

Although the housing market struggled to maintain an even footing in 2011, gradual improvement is expected in 2012 and beyond, according to projections by Lawrence Yun, chief economist of the National Association of Realtors.

“Tight mortgage credit conditions have been holding back home buyers all year, and consumer confidence has been shaky recently,” Yun said. “Nonetheless, there is a sizeable pent-up demand based on population growth, employment levels and a doubling-up phenomenon that can’t continue indefinitely. This demand could quickly stimulate the market when conditions improve.”

Yun projects growth in Gross Domestic Product to be 1.8 percent this year, then rising moderately at a rate of 2.2 percent in 2012. With job growth of 1.7 to 2.2 million next year, the unemployment rate is expected to decline to 8.7 percent by the second half of 2012.

Mortgage interest rates should gradually rise from recent record lows and reach 4.5 percent by the middle of 2012.