Housing and construction

In general, the economic condition of a country has a significant effect on its housing and construction markets. For example, housing construction and sales usually increase in more prosperous economic times because people tend to purchase houses. The reverse also is true: in less prosperous economic periods, housing construction and sales usually decline. The International Monetary Fund (IMF) and the World Bank foresee lacklustre economic performances for both the US and the Euro area (also called the Eurozone) in 2014 and 2015. The IMF (2014a) forecast overall growth in gross domestic product (GDP) in the advanced economies of 2.2% in 2014, increasing to 2.3% in 2015. Estimates for the US were somewhat more than this, at 2.3% in 2014 and 3.0% in 2015, and lower for the Euro area, at 1.2% in 2014 and 1.5% in 2015. The outlook is also disappointing for the Organisation for Economic Co-operation and Development (OECD) countries as a whole, with a forecast increase in GDP of 1.5% in 2014 and 1.9% in 2015 (IMF, 2014a). According to the World Bank (2014), “Developing countries are headed for a third consecutive year of disappointing growth below 5% … the Euro area is on target to grow by 1.1% and the US by 1.9% in 2014”. Fragile consumer and business confidence, high unemployment in some member countries, continued banking-sector and fiscal restructuring, and lingering sovereign debt problems restrain economic growth in developed and high-income regions such as Europe. The Euro area is still suffering from the after-effects of the 2008 global financial crisis. The US economy appears to be improving slowly, but several of the uncertainties affecting the Euro area, particularly business uncertainty, also are affecting the US.