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

Wholesale Prices Flat in August   Full Article
Washington, DC, Sept. 16, 2014 -- Wholesale prices in August were flat due to declining gasoline and food costs, according to the Labor Department.

Demand for LEED Credentials Rising, Study Shows   Full Article
Washington, DC, Sept. 16, 2014 -- The U.S. Green Building Council (USGBC) said a study of job postings reveals that demand for the LEED Accredited Professional (LEED AP) and LEED Green Associate credentials grew 46% over a year.

WFCA Seeking Hall of Fame Nominations   Full Article
Anaheim, CA, Sept. 16, 2014 -- The World Floor Covering Association is accepting applications for nominations to the Floor Covering Industry Hall of Fame.

CBC Flooring Signs Southwest Distributor   Full Article
Commack, NY, Sept. 16, 2014 -- CBC Flooring has formed a distribution agreement with Sustainable Surfaces to handle its products in Southern California and Las Vegas.

Five Trade Shows Form Design & Construction Week   Full Article
Las Vegas, NV, Sept. 16, 2014 -- Five of the leading design and construction industry tradeshows have signed on to be part of the 2015 Design & Construction Week to create what is likely to be the largest-ever residential construction exposition.

Scott Group Acquires Hokanson Carpets   Full Article
Grand Rapids, MI, Sept. 15, 2014 -- Michigan-based Scott Group Custom Carpets said it has acquired Texas-based Hokanson Carpets.

New York Manufacturing Improves at Faster Rate   Full Article
New York, NY, Sept. 15, 2014 -- Manufacturing conditions in the New York area improved at the fastest rate since October 2009 in September, according to the New York Fed.

Inmates Learn Concrete Polishing in Jail   Full Article
Madisonville, KY, Sept. 15, 2014 -- Hopkins County Jail was looking for a solution to replace tiles throughout the facility when head jailer Joe Blue decided polished concrete was a viable option.

Housing Not Adequate for Wave of Boomers   Full Article
Cambridge, MA, Sept. 15, 2014 -- America’s older population is in the midst of unprecedented growth, but the country is not prepared to meet the housing needs of this aging group, concludes a new Harvard report.

Domotex Asia Set for March 24-26   Full Article
Shanghai, China, Sept. 12, 2014 -- Domotex Asia/Chinafloor will be held March 24-26 in Shanghai.

Retail Sales Increase Broadly in August   Full Article
Washington, DC, Sept. 12, 2014 -- U.S. retail sales rose 0.6% in August, as consumer bought automobiles and a variety of other goods, according to the Commerce Department.

Consumer Sentiment Highest in More Than a Year   Full Article
Ann Arbor, MI, Sept. 12, 2014 -- U.S. consumer sentiment rose in September to its highest level in more than a year, according to the Thomson Reuters/University of Michigan index.

Greenberg Fund Awards Two Scholarships   Full Article
Manchester, NH, Sept. 12, 2014 -- CCA Global Partners has announced the recipients of two $5,000 scholarships through the Alan Greenberg Scholarship Fund.

Dover Rug & Home Opens Boston Showroom   Full Article
Boston, MA, Sept. 12, 2014 -- Dover Rug & Home has opened a second location in Boston in the Back Bay.

Armstrong Headquarters Gets LEED Recertification   Full Article
Lancaster, PA, Sept. 11, 2014 -- Armstrong World Industries said its corporate headquarters building has been awarded LEED Platinum recertification from the U.S. Green Building Council.

Shaw Contract Names Winners of Design Contest   Full Article
Cartersville, GA, Sept. 11, 2014 -- Shaw Contract Group announced the winners of its annual Design is… competition.

Initial Unemployment Claims Rise Last week   Full Article
Washington, DC, Sept. 11, 2014 -- Initial claims for unemployment benefits rose to 315,000 last week, up from the previous week's revised total of 304,000, according to the Labor Department.

Dal-Tile Holding Groundbreaking for Tennessee Plant   Full Article
Dickson, TN, Sept. 11, 2014 -- Dal-Tile is scheduled to hold an invitation-only groundbreaking ceremony this afternoon for its new $180 million plant in Dickson County, according to the Tennessean newspaper.

Foreclosures Edge Higher in August   Full Article
Irvine, CA, Sept. 11, 2014 -- Foreclosures rose in August the first time in nearly four years, according to tracking firm RealtyTrac.

CFI Presents Awards at Annual Meeting   Full Article
Kansas City, MO, Sept. 11, 2014 -- The Certified Floorcovering Installers recently presented awards at its annual convention.