The National Association of Home Builders’ (NAHB) chief economist, David Crowe, reported good news for the market watch at the International Builders’ Show January 20-22 in Las Vegas. Nationally, single-family housing starts increased 26% to 800,000 in 2014. Crowe reported, “This is still well below a normal level of about 1.3 or 1.4 million starts. While it’s a good year, it still leaves us a good distance away from where we need to be.”
In addition to Crowe, David Berson, senior vice president and chief economist at Nationwide Insurance, and Frank Nothaft, chief economist and vice president at Freddie Mac, also joined the “Housing and Economic Outlook” panel. Nothaft predicted 15% overall growth forecast and that house prices would continue to rise in 2015 at at 3.5 – 4 percent rise in values. He added that they see mortgage rates going up to 4.5% on the high side at the end of this year, going from “dirt cheap to cheap”. Overall, affordability for buyers in most markets will be well maintained in the context of strong job and income growth.
In their eyes, the three main challenges holding the housing market back right now are:
- Lending standards
- Lack of household information
- Student debt
- NAHB forecasts 1,162,000 total housing starts for 2015, an increase of 15.5% (total combined)
- Strong economic growth accompanied by low interest rates should equal the perfect mix for a boost to housing in 2015.