Fasten your seatbelts for another "bumpy ride" in the housing market next year, says Freddie Mac's chief economist Frank Nothaft.
The mortgage company, now administered by the government along with Fannie Mae, published its outlook for 2012. While mortgage rates are projected to remain at record lows at least through the middle of the year, there will be fewer loans made for single-family homes. However, mortgages for multifamily homes will increase.
The outlook from Freddie Mac doesn't tell us anything we don't already know. Housing inventory includes a glut of foreclosed properties that is depressing the market. High unemployment only makes it worse, with more distressed properties resulting from income loss when workers are laid off.
Freddie Mac predicts that the economy will improve by 2.5 percent next year and the unemployment rate will remain higher than 8 percent.
A week ago there were some positive signs that the market was headed in the right direction as we move into 2012. Builder confidence rose as more potential buyers emerged and the Commerce Department announced that housing starts rose 9.3 percent in November to a seasonally adjusted annual rate of 685,000 units, the highest since April 2010.
But then the National Association of Realtors announced that existing home sales were actually 14.3 percent worse than originally reported, due to errors in data-collection dating back to 2007. That means distressed properties account for a larger share of the market and put downward pressure on nondistressed home prices.
What do you predict for the 2012 housing market?
Keep up with your wealth and mortgages and follow me on Twitter.
Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.