An early spring boost to housing activity likely has left the market in “pause mode,” according to David Crowe, chief economist at the NAHB. And although the long-term growth charts upward, Crowe and other market-watchers who participated in the association’s spring construction webinar last week aren’t expecting it to be perfectly linear.
“The economy is in an uneven recovery and we can expect some corresponding ups-and-downs in the housing market in the months ahead,” Crowe said. He noted that household demand should rise, particularly as “echo boomers” look to make purchases. He adds that mortgage rates are not likely to exceed 5 percent by the end of 2013, and house price-to-income ratio, now at 3-to-1, saw a drop from its housing-boom heights. However, strict lending criteria for builders and buyers, increased foreclosure rates, and low job growth numbers for March check some of this optimism.
Yet March construction figures reflect continued growth. U.S. Census figures show a 7.1 percent increase in new residential sales for March over February’s revised figures, beating estimates by a similar margin. Residential construction spending for March increased less than 1 percent over February, totaling a seasonally adjusted annual rate of $244.1 billion, which is 6.5 percent higher than one year ago and also includes a seasonally adjusted 23.3 percent increase in multifamily starts from a year ago to value $16.6 million for March.
Noting single-family housing production totals of 434,000 for 2011, Crowe forecasts a 17 percent increase to hit 503,000 for 2012, and an increase of 52 percent over 2011 to total 660,000 in 2013.
He also notes a 55 percent gain in multifamily over its 2010 numbers to reach 177,000 units a year later. The sector is expected to gain 22 percent over 2011 to total 216,000 units this year, and he says it should grow by nearly 33 percent over 2011 to reach 235,000 units in 2013.
At a more micro level, Robert Denk, NAHB assistant vice president for forecasting and analysis, pointed out variation in how the downturn affected individual states. Nationwide, residential building dipped to an average 27 percent of its 2000 to 2003 production levels. Yet California, Florida, Nevada, and Arizona—the states hardest hit—bottomed out at 10 percent to 15 percent of normal levels, while other states only halved their production levels, he said.
