If the data and experts are correct, 2015 will be a very good year for housing, which will likely continue to improve through 2016.
Frank Nothaft, chief economist for Freddie Mac, said he expects total housing starts will rise by 20% over 2014. At the same time, total home sales are also expected to increase by about 5% over last year.
According to Nothaft, construction will increase for both single-family homes and apartments in 2015. Interest rates, now at their bottom, are expected to go up a bit in 2015, while lenders are expected to ease up slightly on their standards, according to Freddie Mac.
Housing starts are expected to be on the rise through 2016, when they are expected to increase by another 20% over 2015.
The National Association of Home Builders reported that home builders in many markets saw their business increase last year, and predicts that trend will continue in 2015 as the housing market continues to recover at a steady, gradual pace.
Construction on new housing units, or housing starts, was driven heavily by multifamily homes in 2014, but that is expected to shift this year, according to Jonathan Smoke, chief economist for Realtor.com®. “We are forecasting 16% growth in starts, driven now more by growth in single-family starts, which we are expecting to grow 21%,” he said.
Smoke also said that shortages of both workers and building products will somewhat limit single-family construction growth, as well as keep overall supply tight. “The constraints on new construction supply factor into our assumptions about existing home sales growth and overall tight supply of homes for sale,” he said.
The housing market will improve in line with the country’s overall economy, which is predicted to grow by 3% this year, said Nothaft. He indicated that a better economy will translate to more jobs and higher wages, which should give more potential homebuyers the means to make home purchases.
Workers in the United States can expect a median base salary increase of 3% in 2015 across all main employee categories and most industries, according to the Society for Human Resource Management.
