U.S. Housing Market - 7/4/14
Today, we declare the likelihood that the U.S. housing market will bounce back during the second half of 2014. According to Moody’s Analytics, the U.S. housing market will not only rebound during the second half of this year, but will strengthen further in 2015.
Demand for housing will pick up and the slender inventory of desirable homes available for sale and tightening rental markets will jump-start residential construction. This strengthening demand will also keep home prices rising. The reemergence of housing market recovery would be most welcome. Recently, the housing market has managed to disappoint due to a combination of last summer’s surge in mortgage rates and an ensuing winter that robbed the broader economy of much of its momentum.
The pace of new and existing home sales fell from an annualized 5.7 million units in July of 2013 to 5 million at the beginning of this year. Sales have been flat since January with April statistics providing little indication of acceleration. The Moody’s Analytics outlook may seem optimistic, but is based on expectations that job growth will persist and that pent-up demand for housing will be unleashed. Recent declines in mortgage rates will help.