Housing market poised to push recovery
28 Jan, 2013
NEW YORK, Jan. 28 (UPI) — More than 50 percent of economists in a recent poll indicated the U.S. housing market is poised to push an economic recovery in 2013.
In more or less a tie for second place, economists also cited increased energy production, help from the Federal Reserve and consumer spending as drivers of a recovery this year, CNNMoney reported Monday.
In the survey sponsored by CNNMoney, economists pronounced housing as ready for a comeback.
“Homebuilding activity will likely remain the strongest growing component of the economy in 2013. After several years of excess supply, demand and supply conditions are now in much better balance,” said Keith Hembre, chief economist of Nuveen Asset Management.
Economists pointed out that a tight supply meant home builders would see growth in 2013. Economists forecast 1 million private home construction starts for 2013, which would put home construction on pace to grow 28 percent in the year, similar to the growth builders enjoyed in 2012.
In addition to low interest rates, the housing market is working its way through the glut of foreclosed properties that depresses prices. As prices rice, more homes will likely be placed on the market. In addition, the value of the equity borrowers accumulate will rise.
“One of the most significant indirect effects from the housing recovery is the ‘wealth effect’ on consumers due to the recovery in home prices,” said Joseph LaVorgna, chief U.S. economist of Deutsche Bank.
“Even small moves in home prices can have large effects on consumption, because housing comprises such a significant share of household assets,” he added.