Despite a surprising slowdown in household growth at the end of 2015, the outlook for the U.S. housing market remains upbeat thanks to solid housing demand driven by continued job growth and incipient wage gains. Positive U.S. economic activity continues to support the housing market, which shows little chance of a downturn in the next year, according to the latest housing market barometer released today by Nationwide, the insurance and financial services organization.
The forward-looking Health of Housing Markets Report evaluates the housing health for the U.S. and 400 metropolitan statistical areas (MSAs). This quarter's performance rankings show housing markets in the vast majority of MSAs remain healthy. The latest report suggests that most local housing markets should see sustainable expansion over the next year, although there are increasing concerns in markets with strong ties to the energy sector.
"The cumulative boost from stronger job growth over the past two years, particularly for millennials, combined with the pent-up demand to form households resulted in a sizable jump in household formations starting late in 2014 and running through most of last year," said David Berson, Nationwide's senior vice president and chief economist. "The recent economic, jobs and wage data do not support the surprising decline in household formations we saw at the end of 2015, and because of continued economic expansion, we do not expect a housing downturn in the next year."