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Housing Continues to Gain Ground despite Economic Slow Growth

Although the economy seems to be transitioning to a slightly stronger growth path, unresolved fiscal decisions pose significant headwinds in early 2013. “The question mark surrounding potential tax increases and government spending cuts produces signif

Although the economy seems to be transitioning to a slightly stronger growth path, unresolved fiscal decisions pose significant headwinds in early 2013. “The question mark surrounding potential tax increases and government spending cuts produces significant economic uncertainty,” said Fannie Mae Chief Economist Doug Duncan. “Our February forecast accounts for a modified version of sequestration unfolding in 2013, which we expect will result in less fiscal constraint – roughly a 0.2 percentage point drag. Our outlook is bolstered by the employment picture which is trending better than previously reported, as well as the momentum in manufacturing and energy production.” The improving performance of the housing market, boosted by strengthening home prices, inciting more potential buyers to the market, is expected to continue through 2013 and will be considered an important growth driver. Overall, economic growth is expected to come in at 2.0 percent for all of 2013, in line with average growth since the recovery began more than three years ago, Economist Ducan also expects the housing recovery to broaden this year and said, “… the degree to which these drivers will serve to offset the headwinds from ongoing and forthcoming fiscal contraction is still to be determined.” Source: Fannie Mae

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