WASHINGTON Economic growth will rebound in the second quarter, averaging 3.1% over the next six quarters, but the housing market may not be as strong due to constraints on lending, according to bank economists.
"We expect the housing market is going to recover from its recent 'soft patch,'" said Christopher Low, chief economist at First Horizon National Corp.
Still, the forecast shows 2014 existing home sales will be slightly below the 2013 rate.
Low told reporters at a press briefing that it's "tougher" to a get mortgage today because of the new "qualified mortgage" rule.
"The average FICO scores for people getting mortgages are higher this year than last year as a result of the new regulation," he said at an American Bankers Association press briefing Friday morning.
The Consumer Financial Protection Bureau finalized the rule last year, which is designed to create a safe mortgage that fits certain underwriting requirements. The rule went into effect in January.
The ABA Economic Advisory Committee that Low chairs is forecasting home sales will bounce back in the current quarter from the first quarter dip, but not exceed the sales rate of the fourth quarter of 2013.
Their consensus forecast calls for existing home sales to remain relatively flat rising from a 4.9 million seasonally adjusted annual rate in 2014 to a 5.1 million rate in 2015. If that forecast is correct, 2015 sales will match the existing sales rate of 2013.
The economists are more optimistic when it comes to new home sales. Overall, they expect new home sales to rise 7.4% to a 463,000 seasonally adjusted annual rate in 2014.
In 2015, sales of newly built homes will jump 11% to a 516,000 seasonally adjusted rate, the survey said.
The committee's consensus forecast calls for second quarter gross domestic product to rebound to 3.8% from a negative 1% in the first quarter.
"We are optimistic that we will see solid growth going forward through the rest of this year and into next year," Low said.
"Job growth will average gains of over 200,000 per month for the remainder of the year."
Friday's "jobs report, indicating 217,000 jobs created in May, reaffirms our outlook for the jobs market," he said.