Reporting from this year’s National Association of Realtors convention in San Diego, Steve Kerch of MarketWatch highlights real estate analysts’ predictions for next year’s U.S. housing market, and its effect on the overall economy.
The housing sector will be a positive contributor to the U.S. economy in 2016, overcoming concerns about rising interest rates, tight mortgage credit and student-debt burdens that are holding back many buyers, according to analysts.
“This was a good recovery year for housing, although not anywhere near the peak in terms of home sales,” said Lawrence Yun, the NAR’s chief economist. “Next year the recovery continues, but it will be at a slower pace.”
Yun said he expects as many as 5.5 million existing-home sales in 2016, up from an estimated 5.3 million this year. The median home price across the U.S. is expected to rise 5% next year after an increase of 6% in 2015. That should help push GDP to a 2.7% growth rate for the year, he predicted.
While home prices have recovered in many areas of the country to meet or exceed their peaks during the housing bubble, home sales still remain 25% below their top in 2005.
Cris Deritis, senior director of consumer economics for Moody’s Analytics, said there are three key areas for optimism about housing in the coming year: the labor market is coming back to near full employment, wage growth is finally picking up and there are millions of new households waiting to be formed that have still not done so thanks to the Great Recession.
“The key driver there is we have 4.5 million more 18- to 34-year olds living with their parents than at the start of the recession,” Deritis said. “With rents rising and wages growing – and the parents pushing – that should send many into the housing market.”
