John Varano

Last year, high hopes for the housing market looked bleak during what turned out to be a slow winter. Harsh weather stalled activity in some parts of the country and the experts and analysts began to question their optimistic outlook for the year. As spring rolled in, however, sales picked up and 2015 turned out to be a strong overall year for the residential real estate market. This year got off to a similarly slow start. But, according to Fannie Mae's most recent Economic and Housing Outlook, financial market conditions now appear to be improving and, though challenges remain, strong consumer and business spending combined with a healthy labor market is expected to keep the economy stable. Doug Duncan, Fannie Mae's chief economist, says that, while the economy has regained its footing, many Americans aren't seeing similar gains in their income and – along with higher home prices – it's beginning to cause concern. “A less optimistic outlook for future wage gains, especially among small business employees, coupled with continued strong home price appreciation boosted by lean inventory, is adding to the housing affordability challenge,” Duncan said. “Our latest Home Purchase Sentiment Index shows that high home prices are a top reason for consumers' perception that it's a bad time to buy a home. However, low mortgage rates should help support moderate housing expansion as we move through the year.”