Housing Demand Flat in 2012: Fannie Mae Economist
Special to CNBC.com
Housing demand this year will stay at 2011's low levels because worried consumers have no incentive to rush out and buy, Fannie Mae chief economist Doug Duncan told CNBC Friday.
Despite continuing low interest rates and falling home prices "there's no sense of urgency, and 25 percent of us who have jobs are worried about keeping them for six months. Why do you think this is a time to borrow $200,000 and buy a house?" Duncan said, referring to results from a survey of consumers the mortgage lender conducts monthly.
While the U.S. has "reached bottom" in terms of foreclosures and house price declines, "2012 is not going to look much better" than the previous year, the economist said.
Duncan said there would have to be six months of job growth — 250,000 to 300,000 more jobs — to produce a rapid turn in the housing market. "If we don't get the job growth, it's a slow year in housing," he said.
The U.S. economy as a whole is improving slightly, Duncan said, with Fannie Mae forecasting 2.3 percent growth this year after 1.7 percent in 2011. He's also cut the odds of recession to 25 percent from the 50 percent likelihood he predicted last year.
"It's not completely out of the picture, but the fourth quarter helped give people some confidence that we’ve moved away from the edge," Duncan said.