Fitch predicts housing upswing to continue for two more years

The single-family housing market will continue to grow for at least two more years, according to a 2016 U.S. Housing Forum report from Fitch Ratings.

Fitch predicted single-family starts will rise 11.5% for 2016 and 11% in 2017, in a June 23 news release citing the report.

Fitch Ratings Inc., one of the nation’s top three credit rating agencies, based its predictions on past models of housing trends.

“The report noted that the average length of an upcycle period, when excluding the cycle preceding the most recent financial crisis, was 4.3 years,” wrote Jacob Passy in a June 20 article published by National Mortgage News. “The last cycle meanwhile featured around 14 years of expansion followed by between five and six years of contraction,” he wrote.

Single-family starts have risen in five of the past six years and have consistently improved since 2012, but the magnitude of improvement has been considerably less than in past recoveries, according to the Fitch news release. With annual production of homes still well below the long-term averages, Fitch predicted “there is room for at least two more years of expansion.”

The prediction bodes well for first-time buyers, which comprise a large portion of housing purchases, according to another Fitch press release.

However, the release stated a possible challenge to housing recovery is labor shortages, which are “more acute than usual for this stage in a recovery and could persist and become more widespread.”

Forbes contributor Bill Conerly said housing construction will increase this year and next, but home prices will rise, which could slow down the upswing.

“Higher mortgage rates will eventually take their toll, but we’re 18 to 24 months away from that,” Connerly wrote in an online Forbes article, “Housing Forecast 2016-2017: Two Years Of Growth”

Overall, in terms of volume and sales, the state of housing in the U.S. will remain healthy over the next five years, according to a recent online blog on Builder, published by Hanley Wood, a marketing and information firm for the construction industry. “But demand will most likely continue to outpace supply,” the blog stated.

To learn more about the Fitch report, see https://www.fitchratings.com/site/pr/1007896.

By |2019-11-25T08:09:51-06:00August 5th, 2016|Financial Services|0 Comments

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