The housing recovery is at a “turning point” and it needs more jobs and income growth to gain momentum, according to economists at Wells Fargo Securities.
Speculative forces such as investors snapping up REO and turning them into rentals has reduced inventories and pushed up prices. But there are fewer bargains in the foreclosure pipelines today.
Going forward, the housing recovery will depend on homebuyers. “Put simply, we need more of them. In order for that to happen, overall employment conditions need to improve further,” according to the latest WFS Housing Chartbook.
The economists note that mortgage rates have retreated below 4.5% and loan demand is beginning to revive. But hiring remains sluggish, which “severely limits the upside for housing demand nationwide,” the chartbook says.
The WFS Economics Group has lowered its estimate for new home sales. The new estimate calls for 440,000 new home sales this year, up 19% from 2012. Back in July, the WFS economists expected a 24% increase in new home sales.