The housing market will continue to be marked by slow and steady growth throughout this year, however, a number of favorable conditions will pick up the pace in 2016, says the National Association of Home Builders (NAHB).
Things like solid employment gains, attractive mortgage rates, a growing economy and pent-up demand will help keep the housing market moving forward in 2015 and into next year, according to economists who participated in NAHB’s 2015 Spring Construction Forecast Webinar last week.
“This should be a good year for housing, buoyed by sustained job growth, rising consumer confidence that is back to pre-recession levels and a gradual uptick in household formations,” said NAHB Chief Economist David Crowe in a written statement. “We expect 2016 to be even better, due to a significant amount of pent-up demand an an economy that will be entering a period of reasonable strength and consistency.”
NAHB is projecting that single-famly housing will post a 9% gain in 2015 to 704,000 units, and will jump an additional 39% to 977,000 units in 2016.
On the multi-family side, production ran at 355,000 units last year, what NAHB said is considered a “normal level” of production, and is expected to continue in that range or modestly higher through 2015 and 2016.
“Housing demand is now being driven by population growth and employment and income growth,” said NAHB Senior Economist Robert Denk. “We are reconnecting to underlying fundamentals. We have really turned the corner.”
The housing recovery continues to vary by state and region, with the strongest markets centered in energy-producing states such as North Dakota, Texas, Oklahoma, Louisiana, Wyoming and Idaho, according to data discussed during the webinar.
Other states exhibiting strong employment and housing growth include North Carolina, South Carolina, Tennessee, Washington and Colorado.
Focusing on new home sales, price growth for new homes is occurring fattest in the coastal states, and eight of the top 10 healthiest new sale markets are located in the Carolinas and Texas, said Sam Khater, chief economist at CoreLogic.
Of the top 100 new-home sale markets, Houston leads the way at 2,000 sales per month, followed by Dallas and Atlanta, which are running at about half that pace, Khater noted.
Using the 2000-2003 period as a “healthy” benchmark when single-family starts averaged 1.34 million units on an annual basis, NAHB is projecting that single-family production will rise to 61% of normal by the fourth quarter of this year, and will climb to 81% of normal by the end of 2016.
In another way of looking at this “long road back to normal,” by the end of 2016, NAHB forecasts that the top 40% of states will be back to near normal production levels, compared to the bottom 20%, which will still be below 75%.
“What we are seeing, no matter what bucket you are in, the numbers are getting better,” said Denk. “There’s a broader recovery all around.”
Written by Jason Oliva