Dive Brief:
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The market for first-time homebuyers will start to recover next year, Realtor.com Chief Economist Jonathan Smoke predicted last week.
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Smoke predicted new-home sales overall will increase by 25% in 2015. The National Association of Homebuilders has forecast a 28% gain next year, while National Association of Realtors economists said they foresee an optimistic 41% level of growth.
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If mortgage lenders loosen credit requirements, however, it could increase new home sales by 10%, Smoke predicted.
Dive Insight:
A surge in first-time buyers will create a demand for more affordable homes—a product that many homebuilders have backed away from over the past three years as tight mortgage credit requirements and higher-than-average employment for 20-somethings kept young adults from becoming homeowners. In fact, the supply of expensive homes has been rising faster than the inventory of affordable and mid-priced properties, according to Zillow.
If entry-level buyers return to the market next year, builders could have to play catch-up with inventory in their price range.