A poll released by Reuters Tuesday showed that 19 of the 22 economists surveyed forecasted that the nation's housing market recovery will be "modest" in 2016, while only three indicated that recovery will be "robust."
The poll found that existing-home sales are projected to increase, but home price inflation is not likely to.
"Weak wage growth, higher interest rates and a lack of available credit will continue to keep some buyers - particularly younger and first-time buyers-out of the market. These remain the biggest risks," according to Reuters' poll respondents.
Realtor.com Chief Economist Johnathan Smoke mostly agrees with the slowdown in robust activity we have seen this year, with expectations that 2016 will be a "normal, but healthy housing market."
“Next year’s moderate gains in existing prices and sales, versus the accelerated growth we’ve seen in previous years, indicate that we are entering a normal, but healthy housing market,” said Jonathan Smoke, chief economist for Realtor.com.
He added, “The improvements we’ve seen over the last few years have enabled a recovery in the existing home market, but we still need to make up ground in new construction, which we could begin to see in 2016. New home sales and starts will bring overall sales to levels we have not seen since 2006 and will help set the stage for a healthy new home market.”
Ralph McLaughlin, Trulia’s Housing Economist told MReport that there are signs of a slowdown in 2016, along with some signs of pessimism in the housing market.
He noted that in 2016, metros on the "costly coast" (California, Washington, New York, and Massachusetts) are expected to experience a slowdown in the massive growth they have seen over the last two years due to the low affordability levels in these areas. Meanwhile, metros in the "bargain belt" (South and Midwest states) are "ripe for strong market growth," with a number of healthy characteristics such as high affordability, a lot of online searching, and a large population of Millennials.
Ataman Ozyildirim, Director, Business Cycles and Growth Research, The Conference Board told MReport that "next year’s growth performance is much of the same for the U.S." with very few differences from this year.
"We’re looking at about 2.4 percent growth for the next several quarters," Ozyildirim said. "There are a number of opposing forces at play: there is a lot of new technology and innovation but investment is being held back by lack of business and consumer confidence. Housing should continue to support the U.S. business cycle expansion that is entering a maturing phase even if the Fed starts to raise short-term interest rates."