Housing will see gradual improvements in activity this year as the nation’s economy and job market continue to improve, establishing momentum that will produce more considerable gains in 2011 said economists during the National Association of Home Builders show in Orlando last week.
“This year’s spring selling season will be better than last year’s,” said NAHB Chief Economist David Crowe, with job growth providing a stronger stimulus in the housing market than last year’s tax credits for home buyers.
Crowe forecasted 575,000 single-family home starts in 2011, a 21 percent climb over an estimated 475,000 units started in 2010, which in turn showed a 7 percent gain from the 442,000 homes started in 2009.
Multifamily, which is poised to profit from a disproportionate number of Gen Y members moving into the housing market, has seen the bottom of the cycle, he said, and will see its starts rise 16 percent this year to 133,000 units, with a further 53 percent increase in 2012 to 203,000 units.
Builders’ access to the credit they need to start new homes remains the fragile component of the NAHB forecast, Crowe said. So far, small builders have experienced extreme difficulty in obtaining financing, and rectifying the situation as soon as possible is the top priority of the association.
More encouraging is a rebound in the confidence of consumers, who mid-2010 “froze in place, faced with a lot of uncertainty,” he said. A recent pickup in durable purchases for such items as automobiles and furniture indicates that consumers are less afraid today of losing jobs and income.
The U.S. economy will receive a boost from the massive tax package enacted at the end of last year, he said, including more income going into the pockets of wage earners thanks to a one-year 2 percent reduction in Social Security taxes. This will contribute to the gross domestic product strengthening from the 2.5 percent range to 3.5 percent to 3.8 percent by year’s end.
New-home sales, Crowe projected, “will struggle” but begin following employment gains, reaching 405,000 for the year, up from an estimate of about 320,000 for 2010.
The housing recovery will start up slowly this year, he said, because it will be driven by the relatively low housing production Plains states, with Texas the most powerful of the bunch. Traditional bulwarks of housing activity such as California and Florida, on the other hand, will not be among the states whose housing markets recover the fastest.