A growing economy, pent-up demand, competitive mortgage rates and affordable home prices will keep housing on an upward path through 2015.  However, several obstacles including tight consumer credit, shortage of lots and labor and rising material prices are hindering a more robust recovery, according to economists.

“Housing needs an improved economy,” said NAHB Chief Economist David Crowe, adding that the economy is expected to respond as payroll employment continues to grow and the unemployment rate slowly declines.

Consumer confidence is back to pre-recession levels and the purchase of motor vehicles and home furnishings are on the rise, indicating that consumers are increasingly willing to buy big-ticket items such as houses.

Reflecting an increase in credit demand and economic growth, mortgage interest rates are projected to rise to 5 percent by the end of 2014 and 6 percent by the end of next year.  These rates are still low by historical standards and this would not be a significant deterrent to expansion in the housing market.

However, builders continue to face a number of headwinds.  Supply constraints related to lots and labor and rising lumber, gypsum and OSB prices are hurting the ability of builders to meet demand.  Moreover, creditworthy borrowers, particularly younger families and first-time home buyers, are having difficulties in getting home loans.