Home builders have high hopes for strong single-family growth in 2014 as the sector shows promising sales and building potential.
Builders are well aware that a trend is underway for single-family housing development, according to the National Association of Home Builders and Wells Fargo Housing Market Index (HMI).
The HMI, which measures builder sentiment in the single-family market, has been above the 50 mark for the past eight months. Any reading above 50 signals that more builder view sales conditions as good than poor.
Increasing confidence has also given way to healthy outlooks for single-family housing, with NAHB projecting production in the sector will rise 32% in 2014 to 822,000 units.
Additionally, NAHB also expects single-family housing production will surge an additional 41% to 1.16 million units in the following year.
As for sales, the Association forecasts single-family home sales will hit 584,000 this year, a 39.5% increase compares to 430,000 sales in 2013.
“My single-family forecast for 2014 is pretty aggressive—822,000 starts which is likely 200,000 more than 2013,” said NAHB Chief Economist David Crowe.
There are five key points to the housing “turnaround,” Crowe suggests.
“Consumers are back, pent-up demand is emerging, there is a growing need for new construction, distressed sales are diminishing and builders see it,” he said.
A pent-up demand to form households and even build homes will also help fuel housing growth this year, agrees David Berson, senior vice president and chief economist at Nationwide Insurance.
This demand, he suggests, resulted from a lag in new households forming in the aftermath of the Great Recession, which led to more potential homeowners, like college students, moving back home with their parents or “doubling-up.”
“I think this will be a pretty good year for home construction,” said Berson. “There will be a big increase in single-family construction, but not as much for multifamily.”
Written by Jason Oliva