At the recent International Builders’ Show in Las Vegas, David Crowe, chief economist for the National Assocation of Home Builders (NAHB), Washington, D.C., said the housing upturn that took root last year is expected to pick up momentum in 2013, but that “headwinds” along a number of fronts could impede the pace of the recovery.
“Nearly every measure of housing market strength — sales, starts, prices, permits and builder confidence — has been trending upward in recent months and we expect to see gradual but steady growth along these lines in 2013,” according to a summary of his comments posted at www.nahb.com.
In particular, Crowe said house prices are up nearly 6% on an annualized rate over the past 10 months, and that, “This has been a trigger for demand to return. People feel comfortable if they buy a house that it will appreciate, not depreciate, in value.”
He cautioned that builders continue to face several challenges, including stubbornly tight mortgage lending conditions, inaccurate appraisals, rising materials prices and a declining inventory of buildable lots. Moreover, continuing gridlock in Washington over how much more fiscal tightening is needed to stabilize the debt-to-GDP ratio, along with calls by some policymakers for major changes to the mortgage interest deduction, threaten to negatively impact consumer confidence and future housing demand.
The NAHB blog posting said multi-family production, which has posted a 273% gain from its fourth quarter trough of 82,000 units in 2009 to 306,000 units in the final quarter of 2012, is expected to reach what is considered a normal level of production by 2015.
The single-family market, which has the farthest to go, was running at 44% of normal production in the fourth quarter of 2012. Single-family starts are expected to steadily rise to 52% of what is considered a typical market by the fourth quarter of this year and 70% of normal by the fourth quarter of 2014. NAHB is forecasting 949,000 total housing starts in 2013, up 21.5% from 781,000 units last year. Single-family starts are anticipated to rise 22% from 535,000 last year to 650,000 in 2013, Crowe said. They are expected to jump an additional 30% in 2014 to 844,000 units.
On the multi-family side, NAHB is anticipating that starts will increase 22 percent from 246,000 units last year to 299,000 in 2013, and rise an additional 6 percent to 317,000 units in 2014.