Housing Recovery Expected To Pick Up in 2014

Washington, DC, Oct. 4, 2013 -- 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 the National Association of Home Builders Fall 2013 Construction Forecast Webinar.

“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 Crowe.

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.

Meanwhile, households across the nation have been increasing their savings and shedding debt. “They’ve corrected a lot of excesses and feel more comfortable about moving forward,” Crowe said, noting that the University of Michigan Consumer Sentiment Index shows that the%age of consumers who believe that now is a good time to buy a house is back up to levels last seen near the housing boom.

However, Crowe cited several headwinds that are impeding the recovery.

“Credit conditions are much tighter now, builders are increasingly facing labor shortages, lot supplies are tight, building material prices are rising, and inaccurate appraisals are hurting home sales” he said.

“You can’t charge more than you can get an appraisal for,” Crowe added. “Even though we are seeing price increases in labor, land and materials, 36% of builder recently said they had lost at least one sale over appraisals coming in below the cost of production.”

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.

NAHB is projecting that multifamily starts will increase 20% in 2013 to 296,000 units and rise an additional 10% to 326,000 units next year, which Crowe characterized as a normal level of multifamily production.

Meanwhile, residential remodeling has returned to previously normal levels of the early 2000s and remodeling activity is expected to register a modest gain this year over 2012.

“Our Remodeling Market Index has been above 50 for three of the last four quarters, indicating that remodelers feel things are going better,” said Crowe. “Remodeling did not fall as much, so it does not have as much ground to make up.”

Regarding the uncertainties emanating out of Washington over the government shutdown and the impending Oct. 17 deadline when the government will run out of cash to pay its bills, Mark Zandi, chief economist at Moody’s Analytics, expressed optimism that Congress will move quickly to resolve these critical issues.

“I truly anticipate that lawmakers will get it together, but that is definitely a challenge to my economic outlook,” said Zandi.

“If policymakers can’t get it together by Oct. 17, we’re toast, and I think we are going into recession.”



Other Archived Articles

Oil Prices Continue Downward Slide   Full Article
New York, NY, Oct. 10, 2014 -- Oil prices extended their free fall Friday.

Economists See Stronger 2015 Economy   Full Article
New York, NY, Oct. 10, 2014 -- Stronger job growth, increasing consumer confidence, and falling oil prices should aid the economic expansion next year, the Wall Street Journal reported.

Tarkett Holding Year-End Sales Promotion   Full Article
Chagrin Falls, OH, Oct. 10, 2014 -- Tarkett said it is holding its biggest sales promotion ever through the end of the year.

Karndean Promotes Hanno to Sales Director   Full Article
Export, PA, Oct. 10, 2014 -- Karndean Designflooring has promoted Tim Hanno to director of retail sales, effective immediately.

Tight Lending Standards Still Hurting Home Builders   Full Article
Washington, DC, Oct. 9, 2014 -- Tight mortgage lending standards continue to affect sales for single-family builders, according to a survey released by the National Association of Home Builders.

Wholesale Inventories Increase in August   Full Article
Washington, DC, Oct. 9, 2014 -- U.S. wholesale inventories rose 0.7% in August, according to the Commerce Department.

Initial Jobless Claims Hold Steady Last Week   Full Article
Washington, DC, Oct. 9, 2014 -- Initial jobless claims held steady at 287,000 last week, according to the Labor Department.

Quick-Step Starts Promoting Q-Wood Flooring on the Internet   Full Article
Dallas, TX, Oct. 9, 2014 -- Quick-Step developed a new website specifically for its Q-Wood category of flooring.

Mortgage Application Volume Rises Last Week   Full Article
Washington, DC, Oct. 8, 2014 -- Mortgage application volume increased 3.8% last week from the previous week, according to the Mortgage Bankers Association.

Got You Floored on Fast 50 List in Piedmont Region   Full Article
Greensboro, NC, Oct. 8, 2014 -- -Got You Floored, Inc. was named by the Triad Business Journal to the Fast 50 for the Piedmont Triad Region in North Carolina.

Georgia Gov. Deal Visits Mohawk in Calhoun   Full Article
Calhoun, GA, Oct. 7, 2014 -- Earlier this week, Georgia Gov. Nathan Deal toured the Mohawk Flooring Center in Calhoun and spoke to employees about the importance of the flooring industry in the state of Georgia.

Interface Issues Third Quarter Earnings Warning   Full Article
New York, NY, Oct. 8, 2014 -- Shares of Interface fell 16.5% in after-hours trading Tuesday after the company announced lower-than-expected preliminary third-quarter results.

National Retail Federation Expects Holiday Sales Boost   Full Article
Washington, DC, Oct. 7, 2014 -- Retail spending during the holiday season is expected to be the highest in three years, according to a forecast by the National Retail Federation.

Job Openings Highest Since 2001   Full Article
Washington, DC, Oct. 7, 2014 -- Job openings increased to 4.84 million in August, up from 4.67 million in July, according to the latest Job Openings and Labor Turnover Survey.

Builders Offering Incentives as Sales Soften   Full Article
New York, NY, Oct. 7, 2014 -- Home builders nationally have begun sweetening offers in light of slowing sales, according to a Bloomberg News story.

Domotex To Feature Installation Technology for First Time   Full Article
Hannover, Germany, Oct. 7, 2014 -- Domotex 2015 set for Jan. 17-20 will feature 1,300 exhibitors from more than 60 countries.

Fincibec Group Seeking Tile Award Entries   Full Article
Sassuolo, Italy, Oct. 6, 2014 -- The Quinquennial Tile Award, now in its fourth edition, seeking entries using the Fincibec Group's three brands, Century, Monocibec and Naxos, between Jan. 1, 2011 and Dec. 31, 2015.

Armstrong Raising Some Vinyl Prices   Full Article
Lancaster, PA, Oct. 6, 2014 -- Armstrong said it will raise prices in the U.S. and Canada on commercial vinyl composition tile and BioBased Tile by 4%, commercial wallbase by 4%, and select residential tile products.

Stifel Sees Stronger Hard Surface Sales, Weaker Carpet Sales   Full Article
New York, NY, Oct. 6, 2014 -- Analyst Stifel Nicolaus believes that third quarter flooring sales will show stronger sales of hard surface flooring and weaker sales of carpet.

NeoCon East Offers Education for Designers   Full Article
Baltimore, MD, Oct. 6, 2014 -- NeoCon East has announced its educational program for design professionals seeking continuing education.