The real estate market has shown significant improvements in 2012, but the impending fiscal cliff could potentially damage the recovery, according to Clear Capital.
The data firm's Home Data Index said that the closer the country gets to the fiscal cliff, the more the momentum of the housing market is at risk. Signs began to show in November, as price gains in many markets began to soften.
Additionally, the winter slowdown could also slow down the housing recovery, especially in some of the lowest performing metro areas.
"November housing trends hinted at a winter slowdown," said Alex Villacorta, director of research and analytics at Clear Capital. "That said, we remain very concerned about the fiscal cliff given both the threat of uncertainty and the potential for fiscal constraint moving forward."
Villacorta added that the fiscal cliff could be dangerous for housing, as tax hikes would lead to potential homebuyers having less net income, and could be forced to rent instead of buy.
Without a deal by the end of the year, Americans across all income groups are expected to see tax increases, as the Bush tax cuts come to an end.