National market to bottom next year, Fannie predicts

Despite a downward revision to economic growth in the first quarter, moderate growth is expected to continue for the remainder of 2012, according to Fannie Mae’s Economic & Strategic Research Group.

Cautious optimism remains in place for continued gradual healing of the housing market, the report found. Main measures of home prices have firmed in recent months, as the share of distressed sales has declined in a strong seasonal period.

Despite this recent encouraging trend, Fannie Mae researchers expect that home prices on a national basis will show a slight additional decline before bottoming in the beginning of next year. However, some regions have stabilized.

The housing market has performed relatively well in the current environment supported by record affordability and very low interest rates, with home sales up 8 percent year over year, but from very depressed levels in numeric terms compared to 2011.