What are housing market predictions based on?

Some factors on which housing market predictions are based include rent prices, the supply of homes built and mortgage interest rates, notes Kiplinger.com. When considered, these factors can help analysts determine the affordability for new homebuyers and the likelihood of certain groups renting versus buying.

When rent costs are higher than home ownership costs, analysts may predict that people will buy rather than rent because the more stable mortgage payment may look attractive, mentions Forbes magazine.

Furthermore, a supply of more homes and low interest rates can make the market favorable for buying homes in certain areas, especially for first-time buyers. However, certain cities, such as Boston and Houston, might have less favorable housing market predictions due to the sellers' market, where aspiring homeowners may not be able to afford the fewer options available, notes Kiplinger.com.