Despite slowing economic growth, Fannie Mae says the housing market has “performed relatively well” as record affordability and low interest rates continue to bump up home sales.

“Cautious optimism remains in place for continued gradual healing of the housing market, albeit in the face of various headwinds, including weak employment growth, rising student loans, and a continuing stream of foreclosed households,” according to Fannie Mae’s June Economic Outlook report, released by its Economic & Strategic Research Group.

The report notes that home prices have “firmed in recent months” while the shares of “distressed sales have declined in a strong seasonal period.”

Fannie predicts distressed sales will finally bottom out in 2013.  The group expects home prices to decline slightly by 1.2 percent this year, before bottoming in the beginning of next year and regaining that 1.2 percent in 2013.