Economic growth in the U.S. will likely increase about 2.5 percent in 2012, Freddie Mac reported in its December 2011 Economic Outlook released Dec. 14. However, new construction, including additions and alterations to existing housing, will likely only offer modest contributions to the economy.
Freddie Mac noted that a full-fledged housing market recovery will likely elude the country in 2012, but that new construction and home sales are expected to be greater than in 2011. According to the government-sponsored enterprise, single-family housing starts will likely inch up slightly over the next few quarters while multifamily starts, which have already gained ground in 2011, will help push total housing starts up by more than 10 percent in 2012.
Freddie Mac said that competition from existing homes is holding back new home sales, noting that low mortgage rates and existing home prices could lead to an increase in sales by 3 to 5 percent in 2012. Sales volume, however, remained weak given current affordability levels. According to Freddie Mac, U.S. house price indexes will likely move lower before bottoming out in 2012. However, some markets that have seen price increases over the past year will likely gain further ground in 2012.
