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The housing recovery is picking up steam, according to economists participating in NAHB’s Construction Forecast Webinar last week. If you weren’t able to tune in for the presentation, here’s a recap of what we learned:
With home prices and household formations rising and household balance sheets healing, the ongoing housing recovery is expected to gain momentum next year even as several challenges remain, according to economists who participated in NAHB’s Construction Forecast Webinar on Oct. 2. “The cards are in play for a decent and fairly strong recovery in 2014 and particularly in 2015,” said NAHB Chief Economist David Crowe. “From the standpoint of GDP growth, housing has been a plus, growing at two, three and four times the rate of the rest of the economy in recent quarters.” Helping to spur the housing rebound was a double-digit increase in home prices over the past year, driven in part by tight inventories of new and existing homes for sale and gradual gains in employment. “We expect to see price increases moderate in the next few years as we see additional inventory on the market and investors back away as the bargains disappear,” said David. Another bright spot is rising household formations that were delayed during the downturn as college graduates and young professionals were forced to move back in with their parents or double up as roommates. At the height of the housing boom, the U.S. was producing 1.4 million additional households every year. That figure plunged to 500,000 during the depth of the recession and today is now back up to 700,000. On the flip side of the coin, Dr. Crowe also cited several headwinds that are impeding the recovery, including tight credit conditions, increasing labor shortages, shrinking lot supplies, rising costs for building materials and inaccurate home appraisals.
NAHB is forecasting 924,000 total housing starts in 2013, up 18% from 783,000 units last year. Single-family production is expected to rise 17% this year to 629,000 units, jump an additional 31% next year to 826,000 and surpass the 1 million mark in 2015. On the multifamily side, NAHB projects starts will increase 20% in 2013 to 296,000 units and rise an additional 10% to 326,000 units next year, which is back to what could be considered a “normal” level of production. Meanwhile, residential remodeling has already returned to previously normal levels of the early 2000s and remodeling activity is expected to register a modest gain this year over 2012. Read much more about what was said during the Construction Forecast Conference or contact: MondayMorningQuestions@nahb.org.