Predicting U.S. housing market is like handicapping a horse race
- Finding what you would like to hear about the near-term future of U.S. home building may be a matter of where you shop for opinions.
- The Federal Reserve says home construction is behind what was expected and may be grinding in low gear for a while, and Fannie Mae says it cannot see starts reaching a "normal" 1.6 million annual pace before the end of 2016, even though 70% of consumers it surveyed think this is a good time to buy a house and think prices will go up about 2.4% a year.
- Altos Research, which looks at real estate data, says it sees home prices growing 7% next year and that the worriers's concerns "reflect a myopic view of actual market conditions and conflate concerns over the mortgage industry" and other matters.
One notable difference in these views is that some are about how many houses will get built and others are about what houses will cost, including existing homes. It seems likely that slower-than-normal construction would limit supply and push up prices for existing housing stock, but that leaves the question of why builders hold back on the number of houses they start. If first-time and modest-means buyers are not available, how much will builders build?