Fannie Mae predicts that there will be an above-par growth trend by mid 2011 due to improving financial conditions and recent encouraging signs from the labor market.

The November 2010 Economic Outlook by Fannie Mae’s Economics & Mortgage Market Analysis Group reported that "despite challenges, including uncertainty on the domestic fiscal policy and international fronts, improvement in economic activity will likely occur at a gradual pace moving into 2011."

While foreclosure issues are expected to keep home sales low in the fourth quarter, Fannie Mae expects a gradual improvement in 2011, according to a statement.

"For all of 2010, total home sales are projected to decline by about 8 percent from 2009, marking the bottom of annual total home sales in this cycle," said Fannie Mae Chief Economist Doug Duncan. "We expect home sales to increase by about 3 percent in 2011. However, the pace of recovery will largely be determined by labor conditions. If hiring improves at a faster pace than expected, home sales will likely see a stronger gain in 2011 and vice versa."