An increase in homebuilding means that new home sales should go up, too.
When construction levels fell, “buyers were forced into resale homes,” says Irvine, Calif., housing consultant Mark Boud. Many buyers prefer newer homes, which have the latest designs and are more energy-efficient.
“The reason (new home) sales will increase is we are supplying more product,” Boud says.
Mortgage Rates to Rise: Interest rates for 30-year, fixed mortgages likely will rise this year, averaging somewhere in the 4.9 percent to 5.3 percent range, forecasters say.
That’s still low historically, but well above rates for the past 2 1/2 years.
The average rate for a 30-year fixed mortgage had been solidly below 4 percent since late 2011. Last summer, it spiked to 4.5 percent.
The Federal Reserve’s decision last month to start reducing purchases of Treasury and mortgage-backed bonds likely will push up mortgage rates. But not wildly.
“Rates are not going to soar because we’re still in a pretty weak economic recovery,” Denk says. “When the dust settles, (rates) are still a bargain.”
Credit May Get Easier: After years of tight lending standards, homeowners definitely will have an easier time getting mortgages, says Svenja Gudell, director of economic research for housing website Zillow.
After last summer’s 1-percentage-point increase in mortgage rates, the refinancing business dried up for lenders.
“They want to fill that void with purchase money loans,” Gudell says. That may mean lenders may approve loans to borrowers with lower credit scores or higher debt.
“So we’ll see a lot of people who couldn’t get a mortgage in 2013 able to get a mortgage in 2014,” she says.
Others, however, aren’t so sure.