Fannie Mae’s March Economic Outlook forecasts a bumpy but moderate recovery for the housing market in 2011. Boosted by overall economic growth and improvement in the labor market, total home sales will rise 7.0 percent and housing starts will increase 10.6 percent this year, according to the report. But Fannie Mae also expects new home sales to struggle as they compete with distressed sales, which represented 37 percent of existing-home sales in January. The report says home prices will decline modestly before stabilizing later this year and mortgage rates will rise, but remain low by historical standards. More here and here.