According to a report by Reuters on Sunday, there might be a bit of good news for the U.S. housing market. For the first time since 2005, we could see a slight increase in residential construction next year, which might give a small boost to the GDP in 2012. While it’s not expected to significantly lift the entire economy, it does suggest some gradual improvement.
Analysts have pointed out a few core reasons for this potential upturn. The number of new homes available has dropped to a low of 162,000 properties. If demand goes up, there could be a shortage of supply next year. Plus, the number of unsold homes is decreasing, which might help the market further.
There’s also growing optimism reflected in the National Association of Home Builders’ sentiment. Their index has gone up by over 20% in the last quarter, indicating a positive outlook. Additionally, mortgage lenders have slightly eased their down payment requirements, which could encourage more people to buy homes.
The construction of rental units is on the rise too and is expected to keep growing into 2012. However, for the economy to fully recover, other factors need to improve, such as a strong job market, solid income growth, and a generally positive economic trend. Right now, personal income isn’t quite keeping up with inflation. Without these key factors, the housing market might remain slow, despite lower mortgage rates and relaxed down payment requirements.