Home prices have risen, builders have regained steady footing, and mortgage rates boldly increased this past year–all signs of positive turnaround in the housing market. The National Association of Home Builders (NAHB) predicts that the market will continue to improve throughout the end of this year and in 2014.
NAHB Chief Economist David Crowe explained, “The cards are in play for a decent and fairly strong recovery in 2014 and particularly in 2015. From the standpoint of GDP growth, housing has been a plus, growing at two, three and four times the rate of the rest of the economy in recent quarters.” Crowe continued, “We expect to see price increases moderate in the next few years as we see additional inventory on the market and investors back away as the bargains disappear.”
The double-digit increase in home prices helped create the market rebound; due to limited available inventory and gradual gains in employment, builders were able to raise prices.
Recent graduates and young professionals gradually have been moving back out of their parents’ homes and getting places without a roommate, which is another contributing factor to the housing market upswing. Homeowners have also been able to pay off more of their debt in the economically easier times.
The NAHB reports, “At the height of the housing boom, the U.S. was producing 1.4 million additional households every year. That figure plunged to 500,000 during the depth of the recession and today is now back up to 700,000.”
Crowe did caution that there are still hurdles to overcome in this recovering market. “Credit conditions are much tighter now, builders are increasingly facing labor shortages, lot supplies are tight, building material prices are rising, and inaccurate appraisals are hurting home sales,” he said.
He continued, “Even though we are seeing price increases in labor, land and materials, 36 percent of builders recently said they had lost at least one sale over appraisals coming in below the cost of production.” “You can’t charge more than you can get an appraisal for.”
Total housing starts are up by 18% from where they were last year, the NAHB reported in a recent article. Though there’s no guarantee as to what the future holds for American homebuilders, things are looking up.
Home prices have risen, builders have regained steady footing, and mortgage rates boldly increased this past year–all signs of positive turnaround in the housing market.