Fannie Mae Expects Lackluster Spring Home Sales

Fannie Mae expects the home sales market to remain soft this spring.  Their analysis is partly the result of weak mortgage application figures that were down 8% in January and 3.3% in February. Other factors playing in to the Fannie Mae predictions: the extremely low new housing construction starts, continuing high inventory of homes on the market and high distressed sales figures. Additional outside forces may contribute to a weak spring housing market including the steep rise in oil prices and Congressional grappling with the deficit.  These factors contribute to consumer uncertainty and make consumers less likely to risk the purchase of a home.

Sale of existing homes was up 39% in January from the cycle low point in July 2010; however the bulk of these sales were distressed homes.