Home sales could turn out sunnier than expected this spring based on data coming out of the rental market, according to economists at the Mortgage Bankers Association.
Jay Brinkmann, the trade group's chief economist, said Thursday that apartment owners have raised their rates, in particular large investment trust Equity Residential (EQR). That's coupled with fewer people, roughly 60%, who intend to renew a lease, according to a study by Kingsley Associates.
"This means we might see a spring season better than the numbers are predicting," Brinkmann said at the MBA's mortgage servicing conference in Orlando, Fla. The trade group forecasts 4.39 million single-family homes sold in the second quarter, already an increase from the seasonally adjusted 4.17 million a year earlier.
Many Americans ran to rentals during the worst of the housing crisis, pushing homeownership to a 14-year low, and more tenants elected to stay put.
"The question is not how did (homeownership) fall, but how it got so high in the first place," Brinkmann said.
The MBA adjusted its forecast for mortgage originations in 2012 to just more than $1 trillion with more refinances than initially expected, according to Mike Fratantoni, vice president of economics and research. That's still below 2011 levels and would be the lowest since 1997.
Fratantoni expects home sales to grow 10% in 2013, though he predicted refinances will drop off considerably as MBA projects interest rates to slowly move off the lowest levels in 40 years.
Positive employment news, including a continued decline in jobless claims, could impact housing soon, but Brinkmann said uncertainty over business taxes in an election year and European debt could keep growth at bay.
"Everything is going to be based overall where the economy goes," Brinkmann said. "This is going to be a slow year. There are a number of headwinds we're facing in terms of economic growth."