The nation’s housing recovery should gain momentum as 2011 begins, due to an improved economic outlook by consumers, according to recent research from Fannie Mae.

There have been marked improvements in consumer spending and confidence, increased demand for goods and services and falling unemployment claims, according to Fannie Mae. All of these are said to hint towards a brighter outlook for next year.

"Despite rising mortgage rates, our forecast for home sales is stronger than the previous forecast, given our brighter economic growth and labor market outlook," said Fannie Mae Chief Economist Doug Duncan. "We expect modest increases in home sales, despite recent interest rate rises, due in part to modest additional declines in home prices, and we expect people to take advantage of affordability as their employment and income outlook brightens."