The U.S. housing market is expected to start improving in 2011 after bouncing along the bottom, although improvements are expected to be modest and to start only in the second half of the year, according to Bloomberg. Mortgage giant Fannie Mae has forecast that home prices will begin to advance in the third quarter and will bring annual home price gains to 0.6% for 2011, which would mark the first year-over-year gain since 2006. However, foreclosures are still expected to hold back the housing rebound.
The Mortgage Bankers Association (MBA), the National Association of Realtors, and Freddie Mac also joined Fannie Mae in forecasting for increases in both homes sales and construction in each quarter of 2011. Karl Case, a co-creator of the Standard & Poors/Case-Shiller Index said, Theres a good chance of a housing turnaround this year, but he cautioned, Its not going to be enough to give much help to the economy. Meanwhile, the MBA reported on Wednesday that its index of loan applications rose 2.2% in the week ending Jan. 7 while refinancing surged 4.9%, marking the second straight week of increases and the largest gains in two months.