Top housing economists don’t think an Oil Patch slowdown will result in a weaker national housing market.
Nationwide starts of single-family homes are expected to jump by 26 percent, according to the latest forecast from the National Association of Home Builders.
“That is still well below a normal level of about 1.3 to 1.4 million single-family starts,” said Dave Crowe, top economist for the builders’ association, which is holding its annual conference this week in Las Vegas. “It still leaves us some distance away from where we need to be.”
Crowe thinks the positive impact of lower energy costs will far outweigh any negatives that the drop in oil prices brings.
“Except for Texas, the states that are heavily energy-centric are relatively small,” he said.
And even in Texas, the housing analysts predict that any cutbacks from the oil sector shakeout will be concentrated in specific markets.
“If the decline in energy values remains for a sustained period of time it will have effects on your economy — not throughout Texas but in parts of Texas,” said Frank Nothaft, chief economist with mortgage giant Freddie Mac. “While things may level off in Texas, on net it’s beneficial for the rest of the economy and the housing market.
“When you have a drop in energy price that’s sustained, it has the same beneficial impact as a tax cut would,” Nothaft said. “Your average person sees more cash in their pocket at the end of the day.”
It’s also one of the things that has recently pushed home loan costs down below 4 percent, said Dave Berson, economist with Nationwide Mutual Insurance.
“But it may be one of the things that causes the Federal Reserve to tighten,” he said. “If it causes too much spending, it could be inflationary.”
Berson said the Federal Reserve is likely to raise borrowing costs in the second half of this year.
“Even if the Fed starts tightening, loan rates will be low all year. They will be low next year, too,” he said.
Economists are predicting that home mortgage costs will stay well below 5 percent for a long-term loan this year and will rise only moderately in 2016.
“Affordability for most markets will actually be pretty well maintained,” Nothaft said. “Those are still relatively low rates.”
He is forecasting that overall home sales across the country will rise about 4 percent in 2015.
“That will be the best year for home sales since 2007 — the best in eight years,” Nothaft said. “We are expecting home prices to continue to rise in 2015 maybe a nudge lower — 3.5 to 4 percent.”
The builders association’s home start forecast is significantly higher than those by Freddie Mac and other analysts.
The industry trade group forecast predicted a similar jump in home production for 2014, but it didn’t happen. Single-family starts rose only about 4 percent.
Crowe said a stronger overall economy, more employment gains and an easing of mortgage requirements in 2015 will give the housing recovery more lift.
He said the housing market still hasn’t caught up with demand for purchases left over from the recession.
“My rough estimations are we postponed about 7 million existing home sales,” Crowe said. “Some of those aren’t lost forever.”
Texas has dominated the U.S. housing construction scene as the industry has recovered from recession.
In 2014, Houston, Dallas-Fort Worth and Austin had as many homebuilding permits as the next six largest U.S. markets combined. Houston and Dallas-Fort Worth were the top building markets in the nation.
©2015 The Dallas Morning News. Distributed by Tribune Content Agency
