While the economy showed steady improvement in the past several quarters, the level of growth hasn't significantly aided the housing market, which could affect further progress.
A report from Fannie Mae's Economic & Strategic Research Group showed that the country's Gross Domestic Product rose approximately 7.2 percent in the past three years. While this is a notable improvement from the low point recorded during the recession, it is far off from the 16 percent average from past recoveries.
While the economic growth last quarter was largely due to consumer spending, this could become more reliant on the housing market in the future, the report explained. However, this is completely dependent on major economic hurdles, such as the "fiscal cliff" and debt ceiling, as these could both curb growth in the future, if they are not solved.
"The tone of the economic data we've seen during the past month has been modestly favorable, but our expectations for growth this year remain subdued," said Doug Duncan, chief economist for Fannie Mae. "While the pick-up of activity in the third quarter is encouraging, it is compared to the weak pace seen in the second quarter and doesn't portend a robust recovery in the near term. More encouraging, perhaps, is that the slight increase in consumer spending appears to have fed into the overall housing market data, particularly home sales and starts."
Property data still positive despite slow economic growth
The housing market should continue to improve, as recent real estate records showed gains throughout much of the market, the report explained. Home prices continued to rise this year compared to the same period in 2011. The latest increase was the highest of its kind since before the recession. Additionally, home sales rose markedly last quarter compared to the previous three months.
The report added that the GDP should rise next year, but housing recovery's effect on it may not be as strong.
Specifically, the National Association of Realtors showed that pending home sales increased 0.3 percent in September, but this could help total home sales jump significantly by year-end. Lawrence Yun, chief economist for the NAR, noted in the report that home sales could jump to as much as 10 percent higher this year compared to all of last year.