Markets & Economy

Fannie Mae: Rising mortgage rates won’t trip up recovery

Housing market growth has helped economy cope with fiscal headwinds

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The housing market continued to make up lost ground as it entered the spring-summer season, with home prices, home sales and homebuilding showing signs of improvement, and helping to bolster the economy in the face of fiscal headwinds, Fannie Mae said in its 2013 Mid-Year Outlook. The mortgage giant said that increasing mortgage rates are unlikely to trip up the recovery, since affordability remains near historical highs. But in the wake of a leap in mortgage rates from early May to early June, Fannie Mae said it has raised its forecast for year-end rates by half a percentage point to 4.7 percent. As the market marches ahead, housing starts and home sales in 2013 should rise by 25 percent and 7 percent, respectively, and for the first time in six years, mortgage debt should tick up, Fannie Mae forecasted. Despite improvements, home sales remain depressed. But Fannie Mae said it expects new-home sales, homebuilding activity and construction employment to return to normal marke...