Home sales will be weaker in 2014 than in 2013, but hold on for "moderate pickup" in 2015, according to Fannie Mae's Economic & Strategic Research Group. Still, that moderate pickup in home sales likely won‘t be enough to post the best performance since 2007, says Doug Duncan, Fannie Mae's chief economist.

"We lowered our expectation for housing starts just slightly to 1 million units for 2014,” Duncan says. “For 2015, we are cautiously optimistic that ongoing labor market improvements, low mortgage rates, rising inventories, and some easing of lending standards will boost home sales by roughly 5 percent. However, we still believe housing will continue along its upward grind rather than have the breakout year some are expecting."

Fannie economists do expect the economy to continue to grow. Real economic growth in the second half of the year is poised to grow 3 percent, which provides a “sound basis for growth in 2015."

“Real consumer spending is poised to pick up in the second half of 2014 from the first half, due in large part to improving labor market conditions, continued declines in gasoline prices, and a subdued pace of inflation," Duncan notes.

Source: Fannie Mae