Housing and Economic Outlook from the International Builders’ Show

February 11, 2013

Aerial of Housing DevelopmentOne of the most popular topics at the International Builders’ Show in Las Vegas was the state of the current housing market, and at the 2013 Housing and Economic Outlook Session, several leading economists shared their 2013 housing predictions. The seminar participants were:

  • David Crowe, Chief Economist at the National Association of Home Builders
  • Frank Nothaft, Vice President and Chief Economist at Freddie Mac
  • David Berson Senior Vice President and Chief Economist at Nationwide Insurance

According to the panel, one of the most significant problems builders faced in 2012 was dealing with policy issues and uncertainty regarding the fiscal cliff. Until the fiscal cliff deal was finalized, many builders were hesitant to make any major decisions regarding home building.

Now that the anxiety over the fiscal cliff has ended, builders’ top concerns have shifted to construction and costs related issues, such as building material prices, lot supply and labor supply. Since many major metros are experiencing a decrease in housing inventories, builders are feeling pressure to pick up the pace.

The good news, however, according to Nothaft, is that housing affordability is the best it has been in decades.  Yet, it is also important to note that access to credit is a top factor in whether or not the housing industry will continue to grow. There are two aspects to the credit access issue.  Many banks are still not lending to home builders, so building new homes for consumers becomes a problem.  On the consumer side, even though mortgage rates are low, many home buyers are still not able to easily obtain mortgages due to increased underwriting requirements required by lenders.

According to David Berson, reducing mortgage rates even further would not necessarily benefit the housing market. The number one factor that will get the market back on track is a higher rate of job growth, which will benefit all levels of homeowners from first time buyers to move-up buyers.

Categories: Economy, Featured

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