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Homebuilders forecast a robust 2015

Homebuilders are feeling more upbeat about the housing market heading into next year. 

Single-family housing production is expected to pick up pace in 2015 while multi-family building will hold its own amid an abundance of renters, according to the National Association of Home Builders (NAHB) fall construction forecast.

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"Single-family builders are feeling good. They are not overly confident, but confident enough to keep moving forward," said NAHB Chief Economist David Crowe.

The optimism stems from a combination of the growing economy, low mortgage rates and pent-up demand. 

In fact, expectations are for the single-family sector to finish out the year much stronger than it began, setting the stage for strong growth next year.

"This is mostly due to significant pent-up demand and steady job and economic growth that will allow trade-up buyers who have delayed home purchases due to job insecurity to enter the marketplace," Crowe said.

NAHB is forecasting 991,000 total housing starts in 2014, up 6.6 percent from 930,000 units last year.

Single-family production is expected to increase 2.5 percent this year to 637,000 units.

Expectations are that building will increase 26 percent next year to 802,000 and hit 1.1 million in 2016.

By the end of 2016, single-family homebuilding is expected get back to nearly normal market levels, a figure set by the benchmark 2000-2003 period when production averaged 1.3 million a year.

Multifamily starts, which Crowe said are back to a normal level, are expected to increase 15 percent this year and maintain that level next year.

Mark Zandi, chief economist at Moody's Analytics, said that prospects are good for continued gains in overall economic and housing activity because of strong jobs growth. 

"We are creating about 225,000 jobs per month, or 2.75 million per year," he said.

"That is double the pace necessary to reduce unemployment and under employment, which augers very, very well for housing demand and the housing market more broadly."

Zandi said the current supply of housing running of just more than  1 million units is well below what is needed in the long run.

"In a normal year, there should be demand for 1.7 million units," he said.

By the end of 2017, Zandi expects mortgage rates to rise from their current rate of about 4 percent back to about of 6 percent.

"The housing market will be fine because of better employment, higher wages and solid economic growth, which will trump the effect of higher mortgage rates," he said.