by: Jann Swanson
Apr 24 2014, 4:22PM
David Crowe, Chief Economist of the National Association of Home Builders (NAHB) told members attending the Association's 2014 Spring Construction Forecast Webinar that a stronger housing picture requires an improved economy. He added that the economy seems poised to respond as payroll employment continues to grow and the unemployment rate slowly recedes. He projected the latter would shrink from its first quarter reading of 6.7 percent to 6.2 percent by year end.
Other economic bright spots include consumer confidence which has returned to pre-recession levels and major purchases such as motor vehicles and home furnishings are on the rise, indicating a willingness on the part of consumers to buy big ticket items which ultimately could include houses.
A growing economy, pent-up demand, low mortgage rates and affordable home prices should keep housing moving upward this year and next Crowe said, but there are headwinds including tight consumer credit, and shortages of lots and construction labor as well as rising prices for building materials such as lumber, gypsum and oriented strand board. These factors are hurting the ability of builders to meet demand.
Crowe sees an increase in credit demand as well as economic growth moving mortgages rates up to 5 percent by the end of 2014 and 6 percent by the end of the following year. These rates are still low by historic standards, he said, and should not be a significant deterrent to expansion in the housing market.
With new-home sales averaging just 8.8 percent of total home sales, barely half the historical average of 16.1 percent, Crowe observed that "this is another reason to believe that the new-home market will have to make up existing ground."
Read the full story at: http://www.mortgagenewsdaily.com/04242014_nahb_housing_forecast.asp
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