Despite a projected 2.2 percent growth in the housing market for the rest of 2010 and near record low mortgages rates, housing demand is down, Fannie Mae’s Economics & Mortgage Market Analysis Group said on Wednesday Sept.15.
The group speculates potential homeowners’ worries about their finances and jobs may be the cause of the flat market in homes, despite lower home prices and interest rates.
“We continue to see a supply and demand imbalance in the housing sector with very low levels of sales activity. This is further delaying housing’s return to normalcy,” said Fannie Mae Chief Economist Doug Duncan in a statement.
As of Thursday, 15-year and 30-year fixed rate mortgage (FRM) rates were at 4.37 percent and 3.82 percent, respectively. Both were near record lows, but likely aren’t enticing enough to boost home sales.
“At this point in the post-recession cycle, housing is usually contributing to economic growth. In our current environment, slow housing growth is detracting from overall economic growth,” Duncan said. “Very low mortgage rates are spurring refinance activity, but we don’t expect low rates to boost purchase activity as long as the labor market remains weak.”
