Optimistic New Home Sales Projections for 2015

Economists, the National Association of Home Builders, and the National Association of Realtors all seem to agree upon one thing at the moment – the real estate market is definitely improving.  There just seems to be a lot of disagreement as to how fast the market is improving or will improve in 2015 and which buyers will get the most benefit from this improvement.  The Wall Street Journal’s parent company which just purchased Move, Inc., the owner of Realtor.com, went straight to the horse’s mouth to hear from Jonathan Smoke, the chief economist for Realtor.com to get his take on the current projections.  Below are the results:

National Association of Realtors: Predicts a 41% increase in new home sales
National Association of Home Builders: Predicts a 28% increase in new home sales
Jonathan Smoke, Economist Realtor.com: Predicts a 25% increase in new home sales

Smoke has a few reasons why he takes a cautiously optimistic viewpoint of the current and future real estate market.  One reason is that there is still a 4.5 – 5 month inventory of vacant new homes to be sold, and prices for these homes have not yet stabilized.  The second reason is that even though employment numbers have grown, new households which would have been established by college graduates may not materialize the way that economists think because of down payment requirements on tight credit home loans and student debt costs which have still not been resolved by Washington D.C.  In other words, these potential home buyers would not have the capital on hand to invest in purchasing a new home.  The last reason why Smoke thinks that the percentage of new home sales will be smaller than both the NAHB and the NAR is because builders will not be able to “ramp up” and start building new homes at a rapid pace.  Most builders divested themselves of empty lots during the Recession because of the cost of keeping them and paying taxes was a drain on their finances.  Therefore, they are not ready to begin building multiple homes at once like they once were as production builders.

However, even the cautiously optimistic increase of 25% for new home sales is still good news for the real estate market.  Another piece of good news is that economists think that the first-time home buyer market may be making a comeback.  News has been filtering out of Washington D.C. that there are programs being created for low-income and moderate-income buyers that will give them down payment assistance once again.  The rumor also is that mortgage companies are going to loosen up on the credit requirements in 2015 as well, but there have been no definite indicators of that just yet.  Because of the positive unemployment numbers that have been reported over the last two quarters, home buyers with good or excellent credit who have savings are now able to go ahead and buy a home because they also now have steady income.  All of these factors have been progressively building builder confidence and increasing the permits, starts, and production of new homes especially in the Greater New Orleans area.  For More Information about buying a new home, Contact Ron Lee Homes at 985-626-7619 or E-mail Info@RonLeeHomes.com.

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