Consumers worried about their financialrnwell being are a major reason why home sales remain relatively lacklusterrnamidst the most affordable home-buyer market in decades.  Interest rates are at levels last seen morernthan 60 years ago and house prices are sharply down from pre-recession peaks inrnmost markets.   Freddie Mac’s House Price Index, which hasrndeclined 25 percent since the peak in mid-2006, has lost less than a percentagernpoint in the first nine months of this year which indicates that the index isrnnear the bottom but is probably not there yet. rnA large inventory of homes in some stage of delinquency or foreclosurernwill continue to put downward pressure on home values especially during thernalways slow winter months</p

One thing that will especially benefit fromrnthe low interest rates is the extension and expansion of the Home AffordablernRefinance Program (HARP) which is available for certain homeowners with performingrnmortgages connected to Freddie Mac or Fannie Mae.  About 900,000 borrowers have already takenrnadvantage of the program and, while estimates of the expansion possibilitiesrnvary, the Federal Housing Finance Agency (FHFA) is projecting that HARPrnrefinances may ultimately double from that level.  </p

Forward looking projections from FreddiernMac indicate that there will be 590,000 housing starts this year and 680,000rnnext year.   There will be only marginalrnimprovement in home sales; this year is projected to finish with approximatelyrn4.65 million sales, rising to 4.80 million next year.  Things should pick up in 2013, with 5.40rnsales projected. </p

The FHFA Housing Price Index which isrnexpected to be down 2.7 percent in 2011 will remain unchanged through 2012 andrnthen rise 2.0 percent in 2013; projections from S&P/Case Shiller are -1.7rnpercent in 2011 but identical to FHFA for the remaining two years.</p

Mortgage appreciations are expected torntotal $1.300 trillion this year, $1.135 trillion next year, and $1.065 trillionrnin 2013 while mortgage rates remain in the 4.5-4.7 percent range through thernend of 2012.  

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