With the inevitable rise in interest rates coming this year, this article from Reuters highlights predictions from economists about the continued strength of the U.S. housing market for the remainder of the year and into 2016.
The U.S. housing market is probably strong enough to stand up against an interest rate hike by the Federal Reserve this year, with stabilizing home prices supporting sales, a Reuters poll of top economists showed.
Of 22 economists surveyed, all but two said the market could withstand the Fed’s expected rate hikes. They pointed to job creation and growing demand for houses from millennials as factors contributing to the market’s resilience.
“Rates are very reasonable now, and the signal the Fed will give when they begin raising their key lending rate will push more people into the market,” said Rajeev Dhawan, director of the economic forecasting center at Georgia State University.
The survey forecast the S&P/Case Shiller composite index of prices in 20 metropolitan areas would rise at an average pace of 5.0% this year, unchanged from June’s poll.
Home prices were seen rising 4.2% in 2016, down from 4.5% forecast in June, according to the poll.
Economists say home price increases of about 5% are just strong enough to raise equity for homeowners to encourage some to put their properties on the market and help address a persistent shortage of houses available for sale.
The increase is also not big enough to price out first-time home buyers, economists say.
