A shortage of homes available for sale could trigger either a sharp rise in U.S. home prices or a surge in new construction next year, predicted a leading housing economist in Denver on Friday.
U.S. home prices could rise 10 percent next year or housing starts could surge 70 percent to 1.2 million, predicted Lawrence Yun, chief economist of the .
“It is either starts or prices, not both,” Yun told attendees in Denver for the annual conference of the
Yun said his updated forecast differs from the NAR’s official forecast of 3 percent to 5 percent home-price appreciation this year and next.
The sharp decline in inventories of homes for sale in recent months is behind the optimistic outlook, Yun said.
One reason supply hasn’t kept pace with demand is that a significant share of homeowners can’t sell without bringing money to the closing table.
About 31.4 percent of U.S. homes with mortgages remain underwater, or worth less than what is owed on them, said Stan Humphries, chief economist at Zillow, an online real-estate data provider.
Humphries said his analysis had focused on how negative equity would dampen demand by creating more uncertainty among buyers, leading him to support a “long, flat bottom.”
What he didn’t appreciate until recently was how negative equity could crimp supply and create upward pressure on prices.
“The housing market in many respects has become like a thinly traded stock,” Humphries said.
Buyers are scrambling for whatever inventory is available, especially on the lower end of the market.
David Crowe, chief economist with the , disputed whether homebuilders could handle a surge in starts like Yun suggested.
“We have lost a tremendous amount of capacity,” Crowe said.
Construction workers have shifted to new careers, building-material plants have been mothballed and bank lending for small-scale builders remains hard to find, he said.
Developed lots available for construction have also dwindled in supply, Humphries added.
Aldo Svaldi: 303-954-1410, asvaldi@denverpost.com or twitter.com/aldosvaldi
