Real Estate

Capital Economics predicts housing improvement through 2014

Home sales and housing starts are anticipated to gain steam in 2013 and 2014, likely reflecting gains seen this year, Capital Economics reported in its fourth quarter housing market report.

The report shows that traditional mortgage-dependent buyers, many of which are institutions versus individuals, will begin to play a more crucial role in the housing recovery.

In 2013, Capital Economics believes the shortage of inventory will lessen as properties in the shadow inventory begin to join the market as short sales instead of foreclosures.

Rising by a significant 42% over the past year, housing starts are anticipated to increase by 50% over the next six months, according to the National Association of Home Builders housing activity index. Capital Economics is predicting starts to come in at 778,000 over 2012 before jumping to 950,000 and 1.05 million in 2013 and 2014, respectively.

The report revealed that over the past few months, released house price data shows that prices are gaining strong momentum that will flood into next year. Additionally, asking prices, which typically indicate the outcome of selling prices, are pointing toward further gains to close out 2012.

In fact, Case-Shiller house prices could end up rising by as much as 6% over 2012.

With the fiscal cliff still unresolved and the housing supply still tight, Capital Economics keeps its forecast conservative. The economic research company predicts that house prices will rise 5% in 2013 and another 4% in 2014 with prices of existing homes likely to rise quicker than new home prices.

However, in the best-case scenario, prices could jump as much as 10% next year.

Check out the Case-Shiller national house price predictions below.

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