Home prices may recover by mid-2011

Across the country, millions of homeowners are still struggling with high credit card and mortgage bills and are attempting to stave off foreclosure.

While many economists predict the gloomy outlook for the housing market will continue into the next year, government mortgage giant Fannie Mae says home prices could rise by the middle of the year.

Fannie Mae, the largest mortgage buyer in the nation, says residential investment, a key measure for home building, will increase nearly 10 percent in 2011, Bloomberg reports. If achieved, this would stop five years of consecutive declines.

“There’s a good chance of a housing turnaround this year, but it’s not going to be enough to give much help to the economy,” Karl Case, co-creator of the S and P Index that tracks U.S. home prices, told Bloomberg. “We’re coming off 50-year lows and we still have to deal with the foreclosure mess.”

In addition, Fannie Mae expects housing demand, home sales and construction to rise in every quarter of 2011, due to strong estimates from the Mortgage Bankers Association, the news source says.

However, some economists see the biggest challenge as the current foreclosure gridlock, which could cause home sales to be lower than expected.