Based on Recent Signs, Analysts Still Hold High Hopes for Housing Recovery in 2015Share on facebookShare on twitterShare on emaiShare on pinterest_shareMore Sharing Services89

Following a disappointing year for housing in 2014, analysts expect housing to rebound in 2015 and reach a point of "sustainable recovery," according to a recent report from the Wall Street Journal.

Economists at both Fannie Mae and Freddie Machave stuck to their predictions that housing will recover in 2015 despite receiving recent reports of slower-than-expected economic growth in the first quarter, including job gains that fell well short of expectations in March.

"We remain comfortable with our call that the Fed funds rate lift-off will occur in September," Fannie Mae chief economist Doug Duncan said last week. "The setback in the hiring picture is in line with consumer sentiment regarding the housing market from the Fannie Mae National Housing Survey."

Freddie Mac deputy chief economist Len Kiefer said of the economic slowdown, "We also remain optimistic about trends in housing markets moving forward for the remainder of the year with mortgage rates low, purchase applications up and pending home sales on a positive upward trend."

According to the Journal's report, some markets have seen double-digit year-over-year growth in home sales, such as Charlotte, North Carolina (20.3 percent), Jacksonville, Florida (18.8 percent), and Seattle, Washington (17.7 percent), which has given many realtors and other mortgage industry stakeholders a renewed optimism regarding the housing market.

According to the latest National Association of Realtors pending home sales index, home sales are expected to make further gains nationwide throughout the rest of the year. In February, the index increased by 12 percent year-over-year, with the biggest gains in Houston (30.6 percent), Jacksonville, Florida (30 percent), and San Diego (27.8 percent). The Commerce Department also reported that in February, new home sales reached their strongest pace in seven years at a seasonally adjusted annual rate of 539,000 for the month.

There are three main factors that will make the housing market sustainable this year, according to the Journal. The first is an improved economy; despite the recent slowdown, the economy has added 3.1 million jobs in the last year, and lower gas prices have lifted consumer confidence; second, lenders have shown signs of expanding the credit box and lowering other costs, such as the FHA reducing its monthly mortgage insurance premium down to 0.85 percent; and third, the return of boomerang buyers, which are buyers who lost homes to foreclosure during the crisis but are now coming back to the market.