“We are in a housing recovery,” he said, and the market continues to “struggle to act more like a post-bust market,” he said in an interview.
The new home market has been very tight with only 160,000 newly constructed houses for sale. Muoio noted that builders are in this process of “restarting the machine” that will deliver more finished homes going forward.
Inventory issues will “ease over next few quarters,” he said, and he estimates there will likely be over 200,000 new homes on the market by next summer.
On the existing home side, inventories are almost back to normal and there are a lot of frustrated sellers that have been waiting to put their homes on the market.
There are currently about 2 million existing homes for sale and that could hit 2.2 million in 1Q 2014.
The chief economist is concerned that the recent slowdown in household formation could impact the sales pace in the second half of this year.
But the recovery has not been one smooth upward trend, he stressed, and there are still ups and downs ahead.
When it comes to foreclosures, he doesn’t expect a surge in REO sales. His real estate research group has been waiting for a “bump” in foreclosures due to the robo-signing settlement. “We haven’t seen that happening yet.”
Overall, Muoio is optimistic about the housing recovery. But he is wary that the debate over Syria and the upcoming budget and debt ceiling negotiations in Washington could create a lot of uncertainty. Buyers might get nervous and pull back.
“Those are the big risks,” he cautioned. Otherwise, the outlook is “generally optimistic.”