Although the economy has struggled to find its footing in the wake of the recession, the housing market has gained significant momentum so far this year, and the future outlook remains promising.
Overall economic activity declined during the first six months of 2012, according to a report from Fannie Mae. This outcome was spurred by a drop in consumer spending and a stagnant job market that has kept the unemployment rate above 8 percent.
Meanwhile, inaction from lawmakers in regard to government spending on programs that could help bolster activity could have some significant long-term implications, the report said.
"The July data hasn't changed our forecast for slow growth in 2012, but we're increasingly focused on the looming 'fiscal cliff' near year-end," said Fannie Mae chief economist Doug Duncan. "The debt ceiling debate, as well as current legislation that could create a drag of more than 4 percent on GDP in 2013, may spur further caution among consumers and businesses alike."
Housing on the up-and-up
Even though the future of the nation's economy remains uncertain, in contrast, many experts from the government-sponsored enterprise have high hopes for the real estate industry.
Specifically, housing affordability has remained elevated for much of the year, and as a result, prospective buyers are coming off of the sidelines to make the transition to homeownership. The sales rate of single-family properties is expected to be 9 percent higher by the end of 2012 than the previous year, the report said.
Additionally, although public property data indicates roughly 12 million households are underwater on their mortgages, resulting in fewer owners able to sell, this has proved to be a double-edged sword.
For example, since fewer homes are going on the market, this has caused the property supply to thin. Although this leaves buyers with constricted options, it has caused them to become more competitive and subsequently resulted in surging homes prices in some areas of the country.
However, even though the housing market is expected to experience further gains in the near future, experts claim they will be marginal at best. Certain factors, such as tightening lending standards and a possible increase in foreclosure activity could prove to be speed bumps on the housing market's path to recovery.