Economists are lowering their expectations for housing starts in 2014, according to a survey performed by the Wall Street Journal. The Journal notes their diminishing optimism is among the most noticeable trend in monthly surveys of economic forecasters in the first half of 2014.
To begin the year, the consensus view among economists participating in the survey was that housing starts would jump 20 percent this year, rising to 1.11 million units. Housing starts were projected to increase from 2013 when they totaled 924,900.
However, the harsh winter halted homebuilding across the nation in January and February, leading to an inauspicious start to the homebuilding season. Furthermore, the Journal noted that mortgage rates also posed a problem, spiking in the previous summer. Coupled with rising home values, many buyers were placed in a situation where they were effectively priced out of the new home market completely.
The on-going ramifications of increased mortgage rates and rising home values caused forecasters to lower their expectations for the year. The June survey's consensus view calls for an amended new home start total of 1.05 million homes.
Regardless of the readjusted total, if home construction meets expectations, it will still see a 13 percent increase from 2013's total. However, housing likely won't give the big growth boost that was initially expected by economists in January, the journal concluded.