U.S. home sales are set to rebound as the economy recovers, according to Fannie Mae’s Chief Economist Dave Duncan, but since prices lag sales, home values in the U.S. won't likely bottom out until 2012.
“We have significant amounts of supply to be absorbed and shadow inventory in the expected foreclosures that will occur in the next couple of years, so we don't expect a robust housing picture for some time,” Duncan said, adding that a recovery would most likely begin in 2014.
Fannie Mae’s January housing forecast shows the median housing price in the U.S. was $217,600 in the first quarter of 2011. That’s a 1.8 per cent drop from the same time a year ago, when it was $221,600. The U.S. housing median won't reach above 2010 levels until 2013, according to Fannie Mae, when the median is predicted to reach $228,000.
“There are some starts of improvement in housing, but we're still awaiting robust growth for at least another year, and returning to normalcy in 2014,” said Duncan.
U.S. new home sales were at 318,000 in 2010, according to Fannie Mae, but will reach 374,000 in 2011 and then 795,000 by 2013. Existing home sales will follow a similar but steadier path, going from 4.9 million in 2010 to reach 5.7 million in 2013.
According to the agency, housing starts are predicted to increase 17.3 per cent and hit 710,000 this year, with another 47 per cent increase to 1.1 million in 2012 and another gain of 42 per cent in 2013 to nearly 1.5 million.
The overall economic outlook will build off growing confidence in the U.S., said Duncan.
“The economy’s performance will move from a fragile economy buffered by various risks around the globe and domestically in 2010, to a growth path which has a firmer foundation and will be less impacted by global events and risks than it was in 2010,” he said.