Home building outlook is cautiously optimistic

Although recent months have seen improvement in the number of housing starts and permits pulled, it will be multi-family builders that feel the uptick initially, according to a panel of economists speaking at the International Builders’ Show in Las Vegas Tuesday.

Apartment builders will be the first to benefit by an increasing number of new households as young adults move out on their own and fewer households double up, the experts said.

Continued low interest rates and an increase in homes prices in most markets are likely to bring back home buyers who have been sitting on the sidelines, they said.

“Finally, people feel if they buy a house, it will appreciate,” said David Crowe, chief economist for the National Assn. of Home Builders.

Home loan rates are expected to remain below 4% in 2013, said Frank Nothaft, chief economist at Freddie Mac. However, he cautioned of some “headwinds” to housing growth, including strict mortgage qualification requirements, uncertainties about employment and consumer cautiousness.

Other questions clouding the picture include the spending and budget issues yet unresolved in Washington.

Describing his panel as “relatively conservative in our forecasts,” David Berson, senior vice president and chief economist at Nationwide Insurance, cited low interest rates, job growth, new household formations and house price gains as other factors supporting a housing recovery.

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