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Positive Economic Growth

Wednesday, July 23, 2014   /   by Alicia Angstadt

Positive Economic Growth

Encouraging economic statistics of late are pushing U.S. Housing toward more pronounced growth in 2015, according to the lates version of the “Chalk Line” released by Fitch Ratings on Tuesday.

Fitch now projects single-family starts to improve 9.5% to 677,000 as multifamily volume grows almost 12% to 343,000. Fitch still expects total starts for 2014 to exceed slightly more than one million. Fitch also projects new home sales to advance about 8% to 465,000 and existing home volume to decline 5% to 4.835 million, largely due to fewer distressed homes for sale.

“Demographics, attractive affordability/housing valuations, and a slow, steady easing in credit standards should sustain and ultimately accelerate the upturn,” report says. “The latest economic and housing macro statistics are generally encouraging.”

The report speculates that the positive trends should sustain growth and lead towards an. acceleration in early 2015 after a below average start to 2014.

However, “The spring selling season was underwhelming enough that this, along with more guarded expectations for the next few months, will lead to more modest growth for macro housing statistics before the year is through,” said Managing Director and lead homebuilding analyst Robert Curran.

The report continued, “Total housing starts are projected to expand 16% to 1.185 million as single-family starts advance 21% and multifamily volume gain 6.7%. New home sales should improve more than 20%, while existing home sales rise 5%.”

The analysts caution that there are still challenges to overcome on the path to the projected growth. “Demand will continue to be affected by narrowing of affordability, diminished but persistent and widespread negative equity, challenging mortgage-qualification standards and lot shortages,” they write. “As Fitch has noted in the past, the recovery will likely remain fitful.”

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