Goldman Sachs Forecasts Housing Recovery Is Solid: Home Sales to Rise Over Next Few Years

more+
less-
more+
less-

Goldman Sachs is an international investment banking legend, having been around since 1869 and when Goldman Sachs issues its opinion on the economic future of an industry or economic segment, many respect and value what the Research Division at Goldman Sachs is predicting.

This week, Goldman Sachs' analysts Hui Shan and Jari Stein are forecasting home sales in the United States will continue to rise over the next several years. They are giving numbers here:

  • 5.2 million in 2013;
  • 5.7 million in 2016.

Goldman Sachs is also predicting unemployment to drop (prediction: 6.2% by 2016) and home prices to rise (17% by 2017).

The National Association of Realtors Shows Rising Home Sales

Meanwhile, the National Association of Realtors reports that in January 2013, home sales rose and the NAR's chief economist, Lawrence Yun, is explaining this as being the result of a growing number of sellers and a steady rise in home prices:

"Buyer traffic is continuing to pick up, while seller traffic is holding steady," he said. "In fact, buyer traffic is 40 percent above a year ago, so there is plenty of demand but insufficient inventory to improve sales more strongly. We've transitioned into a seller's market in much of the country."

According to the NAR, the total existing home sales (seasonally adjusted annual rates) are:

  • January 2013 4.92 million
  • December 2012 4.90 million
  • January 2012 4.51 million

Skeptics Don't Agree with Goldman Sachs

Of course, not everyone agrees with these nice, juicy housing forecasts. Yale economist Robert Shiller is one voice of skeptism here, telling CNBC interviewers that things are not that clear on the housing horizon. Maybe housing will rise, but Shiller is of the opinion that it's not that certain (yet).

And as we all balance these opinions and evaluate things, there is that about-face that Goldman Sachs did last March, when Hui Shan announced that the December 2011 predictions were not panning out and that the predicted housing recovery wasn't happening then, after all.

How to value Goldman Sachs' latest report? Well, maybe the investment banking research hasn't always been accurate - but Goldman Sachs has been around for many, many years - withstanding many economic valleys. There's merit in considering what their research team is reporting this week.

 

Image: Marcus Goldman (1821 - 1904) one of the founders of Goldman Sachs.