In this slowing economic recovery, the housing market is showing signs of resilience but still faces long-term challenges, according to a report from Stifel Nicolaus & Co.
Housing sales are up 50% since 2010, and reached 5.31 million in August — the same level as the 2013 peak. Housing starts have also increased by 1.6% year-over-year.
But the stagnation of income, combined with the steady rise of mortgage rates and a growing preference for renting among younger generations, might contribute to pull the housing market down in coming years.
In fact, 2014 saw the share of first-time homebuyers fall to 33%, a low not reached since 1987. And, only one-third of homeowners who have experienced foreclosure or sold their house at a loss have formulated plans to purchase a house again.
Though housing rates have dropped by 4.5% since peaking in the early 2000s, affordability is on a steady downward slope. A mortgage rate increase of 1% could drag affordability to the lowest reading since the recession.
