Fannie Mae's economic and mortgage market analysis group says the housing market is moving in the right direction and other economic activity shows the year will end on a positive note.
According to the report, activity in the fourth quarter including economic growth of more than 2.5 percent, stronger employment, increased auto sales and slight improvements in the housing market have all contributed to a positive end of 2011.
The last quarter had the strongest growth seen this year and 140,000 private sector jobs were added in November alone. Despite a rough year for both home and auto sales, the fourth quarter showed increases in loan activity, and consumer sentiment also increased regarding spending.
"It is important to recognize that we're ending 2011 on a stronger note than we've seen throughout the year," said Doug Duncan, chief economist of Fannie Mae. "Unfortunately, however, our 2012 outlook is not as rosy as our forecast for the fourth quarter of 2011."
The government-sponsored enterprise predicts that the housing market will most likely remain subdued throughout 2012, as the economy continues to slowly recover.