As the housing market rebound has remained on track for the first half of 2015, this article from MarketWatch predicts a continuation of that trend throughout the second half of the year – and highlights how housing’s strength will affect the overall U.S. economy.
The U.S. economy has reached halftime in 2015 and it’s been a low-scoring affair. But the second half of the year could show more razzle-dazzle.
After contracting 0.2% in the first three months of 2015, the economy is on track to grow a solid 2.5% or a bit higher in the second quarter stretching from April to June. And economists polled by MarketWatch predict comfortable 3% growth in the remaining two quarters of the year.
If that’s going to happen, the U.S. housing market probably has to keep setting postrecession highs. Construction of new homes in June was almost 27% higher compared with a year earlier and permits to build additional properties hit an eight-year peak.
The current mini-boomlet, if you can call it that, has been driven by a combination of rising urban demand for rental units such as townhouses and apartments and as well as a drop in national vacancy rates to a two-decade low.
Younger millennials have gravitated toward cities and many prefer to rent instead of owning their own homes, a trend hastened in part by tighter mortgage-lending standards. They are also forming more families to create additional demand for housing.
At the same time, strong job creation over the past few years that has shrunk the unemployment rate has allowed more people to set out on their own. Many young people, for example, were forced by financial circumstances to move back in with their parents after the Great Recession. Only recently has the so-called boomerang trend started to reverse.
