The chief economist of Fannie Mae, the national mortgage giant, came to town this week with a mixed bag of news about the housing market.
Among the positives: Even if the Federal Reserve raises interest rates in September, rates on mortgage loans are likely to remain low for several more months, economist Douglas Duncan said. Home sales are expected to stay strong.
But Duncan had words of caution, too.
The long-term health of the housing industry depends heavily on millennials — young adults ages 18 to 34 who outnumber even baby boomers. Although millennials may dream of home ownership, their income is so far below that of previous generations that most cannot afford to buy.
“Demographics drive housing,” Duncan said. “What turns renters into buyers is employment and income. We’ve seen employment pick up but not yet income.”