Citing factors such as rising incomes and job growth for younger households, which will have a positive impact on home sales, a new article from U.S. News & World Report suggests a positive 2015 for housing, generating benefits for the overall economy. While the headlines may focus on noticeably smaller gains in housing prices, the large economic impact will come from a still recovering housing market as it transitions to more normal conditions and higher levels of activity.
Housing and jobs are strongly connected. When the economy is expanding, job creation promotes household formation, which in turn increases demand for rental and owner-occupied housing. Other economic drivers of housing include population growth, the need to replace or improve existing housing stock and regional population changes. And to the benefit of the overall economy, all of these factors create jobs in housing-focused enterprises including builders/remodelers, realtors and suppliers and business that provide goods and services to these firms.
For this reason, housing often leads an economy out of a recession by creating a virtuous cycle of improving housing demand that creates jobs and in turn fosters additional demand for construction.
