Who's afraid of mortgage rates?

Las Vegas -- Economist David Crowe brought with him to the International Builders' Show a list of reasons for economic optimism. But he cautioned: The 2016 recovery will be good, but not great.

Crowe, the National Association of Home Builders' chief economist, delivered his annual residential construction forecast here at IBS, along with hopeful forecasts in job growth and GDP. His forecast called for 2016 housing starts to hit 1,257,000, representing a 13.1% jump over the 2015 end-of-year tally that was released on Tuesday. Most of that gain will come from the single-family category, which is expected to increase 17.4% to 840,000 for the year.

Remodeling activity is expected to grow 1.1% over 2015, he said.

Two key factors in the above equations are job growth and household formations, Crowe noted. Private sector job growth has been averaging 240,000 per month over the past two years. GDP growth is expected to climb slightly above last year's level, and consumer confidence is nearly back to its pre-recession peak, he said.

As for pent-up demand, Crowe once again pointed out that when parents kick out of the house their live-in adult children, they are helping to boost the housing market.

Sitting atop the list of soft spots -- or concerns among builders -- is the cost and availability of labor. Other builder concerns, according to the survey of NAHB members, are cost and availability of lots, and environmental regulations.

Speaking at the same event, David Berson, chief economist at Nationwide Insurance, said that most regional housing markets look healthy, thanks to strong labor market conditions. Most of the 400 local housing markets "should see sustained growth in the coming year," he said.

There are exceptions. Areas heavily reliant on the energy industry could face limited housing expansion. These include parts of Louisiana, Texas, Wyoming and South Dakota, he said.

A third presenter also pointed to strong fundamentals for housing in 2016, even as mortgage rates increase. Frank Nothaft, chief economist of CoreLogic, said the gradual anticipated rise of 30-year fixed-rate mortgage average from 4% to 4.5% is best viewed as rising from "cheap to low."

The strongest housing growth areas are expected in the South and West, Nothaft said. "There is stronger growth in households, population and demand for new housing" there, he said.