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Real Estate Watchers Can Get Excited for Second Half of 2014

NEW YORK (TheStreet) -- If you pull the lens back on housing, things actually look fairly positive.

Home prices are up 20% from the fourth quarter of 2011 and price appreciation is expected to maintain a steady pace of 5.3%, according to the most recent CoreLogic Case-Shiller Index.

So why are housing industry experts so skittish on the real estate market?

Thin inventories, homeowners who are afraid to sell because they feel they won't find a decent place to live and an overall sluggish economy are all areas of concern.

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"Limited construction of new homes and low inventories of existing homes for sale contributed to the jump in prices," says David Stiff, principal economist for CoreLogic Case-Shiller. "Developers remain cautious about building too many new houses until they see stronger demand in their markets."

Now Fannie Mae is out with an equally bland look on the U.S. housing market.

The latest FNMA housing report shows an immediate slide in home-buying activity, although things should level out after that.

"We have downgraded our May forecast slightly from April following a very weak first quarter, but we anticipate economic growth to gain momentum in the second quarter and remain firm throughout the rest of this year," Fannie Mae chief economist Doug Duncan says.

"Reduced drag both from government spending and fiscal policy uncertainty as well as improving financial and labor market conditions should contribute to a rebound, but the sizable down draft from the first quarter likely will keep full-year growth subdued," he adds. "Overall, we expect economic growth to accelerate to just over 3% on an annualized basis in the current quarter, and to come in at 2.4% for all of 2014."

Duncan still expresses significant concern over where the real estate market is right now.

"The housing picture remains more worrisome, with existing home sales, new home sales, housing starts and multifamily housing all experiencing year-over-year declines," he says.

Duncan says the market won't fully be "back to normal" until late 2016.

Apparently, it's going to take an uptick in several key economic areas, such as auto sales, business capital spending, consumer spending and employment. Duncan says all of those areas have showed some improvement recently, but will need to really pick up momentum to ignite the housing market.

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