Washington, D.C.—The ongoing housing recovery coupled with improvement in both consumer confidence and the labor market are expected to boost economic growth in the second half of the year, according to Fannie Mae’s Economic & Strategic Research Group. The latest jobs report showed steady year-to-date job creation and measures of consumer confidence are at or near recovery highs. Furthermore, despite a sharp increase in mortgage rates during the past two months, home sales have held up and home prices have continued to post gains, helping to keep the economy on a positive—albeit modest—growth path in 2013.
On the housing front, mortgage rates are expected to continue to rise gradually, averaging 4.7 percent in the fourth quarter of this year—about 40 basis points higher than the June forecast—but the forecast of home sales is little changed, with expectations of an 8.0 percent rise in 2013. However, while the surge in mortgage rates has not significantly hurt purchase mortgage applications, it has led to a marked decline in refinancing applications, which is expected to continue next year.