Chief executive officer Ivy Zelman at Zelman and Associaties expects housing starts to grow by 28% in 2013, she stated at the American Securitization Forum conference during a discussion on the U.S. housing market and the consumer economy.

The housing market is in the midst of recovery and the main driver that will fuel the continued improvement is demographics, Zelman noted.

The population is expected to increase 8% for the year and 11% for the decade in household growth.

The industry is coming up from a “horrific bottom, but still depressed and vast room to run.”

Similarly, home prices rose in 19 of the 20 U.S. cities studied by Standard & Poor’s for the S&P/Case-Shiller Home Price Indices, falling only in New York, for the 12-month period ending in November.

The 20-city composite index rose 5.5% during the 12-month period, while the Case-Shiller’s 10-city composite index rose 4.5%, suggesting a significant market turnaround in 2012.

With tighter inventory, new home construction taking share for the first time in 2005. Also, as real estate-owned pipelines shrinks, builders have a future opportunity to reclaim share.

Residential investment is also expected to drive 40 basis points per year of real gross domestic product growth.

In a recent outlook, Fannie Mae also noted the housing industry is expected to be a huge contributor to GDP growth.

In regards to consumer economy, more tailwinds and fewer headwinds are affecting consumers due to housing, healither household balance sheet, and steady job growth, said Director Elen Callahan at Deutsche Bank ($52.70 1.04%).

Increase in stock prices has held to stablize household assets and income. More improvement in the part of the balance sheet is expected going forward.

Over the past year, households continue to see positive, albeit modest, income gains.

Consumer confience is also moving away from recessional lows.

“This is one of the metrics where housing will have the greatest impact,” Callahan said.

However, the biggest challenge facing the housing market is employment growth, she noted.

The author of this article is: Christina Mlynski

 See the original post at: http://www.housingwire.com/news/2013/01/29/asf-2013-zelman-predicts-housing-rally-room-run

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