For years, economists have dropped numbers for GDP grow, job formation, and mortgage interest rates into their magic calculators to develop forecasts for housing starts.

Now the economy is growing at a ribald pace (5% in the third quarter of last year), strong job growth has driven unemployment to less than 6%, and interest rates remain impossibly low. Yet new home starts still haven’t recovered to anywhere near historic levels. What gives?

Hearing explanations for the market’s relative weakness is one good reason to look forward to next week’s International Builders Show, where several economists will trot out predictions for housing construction in 2015.

Last year, housing economists had turned to weak demand from young buyers to explain the industry’s lack of a meaningful rebound, which many predicted in 2014. Research organizations trotted out several surveys showing that millennials, like previous generations, want to own a home, but they don’t have the savings or the income to do so.

Student debt is preventing many young buyers from buying a home. An analysis by John Burns Real Estate Consulting determined that the housing market loses 414,000 home transactions a year, or 8% of its sales volume, due to student debt loads. A full 29 million people age 20 to 39 roughly, half the population for that age group, have student debt.

Poor-paying jobs are also holding back young buyers. Studies show that real incomes for people age 25 to 34 are falling, while they rise for everyone else. Low income has resulted in anemic household formations, which have been running at half of normal levels for the last seven years.

First time buyers traditionally account for about 40% of home sales, according to the National Association of Realtors. Last year, according to the association’s annual survey, they represented only 33%.

Rising prices for new homes are keeping first-time buyers out of new homes, too. The median price of a new home reached as high as $291,000 last year, a roughly 10% increase over the previous year, as builders chased the trade up and luxury markets.

Another factor depressing housing starts, and sales, is that so many people in recent years have refinanced at low mortgage rates. Many people enjoy such low mortgage payments that they don’t have much incentive to move, unless they have to because of a job change, a separation, or the addition of a child.

Weakness in foreign economies is driving interest rates even lower, which has resulted in another wave of refinancing. Last week, 30-year fixed-rate mortgages were going for only 3.73%, according to a Freddie Mac survey.

The Obama Administration’s recent decision to drop annual mortgage insurance premiums by 50 basis points to 0.85% will be a major topic of conversation at the show. The administration estimates the move, which translates into a $900 reduction in annual mortgage payments, could help between 100,000 and 200,000 borrowers refinance this year.

Meanwhile, it looks like very low mortgage rates will be with us for longer than expected. Most economists don’t think the Federal Reserve Board will raise rates until very late in 2015 due to concern about weakening foreign credit markets.

Mark Zandi, chief economist of economy.com, who may be the most-watched housing forecaster, recently wrote that wage growth “appears imminent” as the U.S. economy approaches full employment. Higher income could lead more millennials to form households, at which point “housing demand and construction will take off.”

The National Association of Home Builders expects a modest, 17% increase in housing starts this year, followed by a big gain in 2016. Freddie Mac, which usually has the most bullish forecast, expects a 20% increase.

See all of the coverage from IBS & KBIS 

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