Strong Single-Family Growth will Fuel Housing in 2014

Filed in Economics by on February 4, 2014 0 Comments

Led by a resurgence in single-family production, housing will continue its climb toward higher ground in 2014, despite challenges that could hinder the pace of the ongoing recovery, according to economists speaking at the NAHB  International Builders’ Show (IBS) in Las Vegas today.

“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 turnaround. Consumers are back, pent-up demand is emerging, there is a growing need for new construction, distressed sales are diminishing and builders see [the change coming].”

Consumer confidence has returned to pre-recession levels and household balance sheets are on the mend. Year-over-year household formations are on the rise and are now averaging 620,000 compared to just 500,000 during the housing downturn. At the height of the housing boom, the U.S. was producing 1.4 million additional households each year.

Meanwhile, new-home sales are averaging just 8.7% of total home sales, barely half the historical average of 16.1%. In the midst of the Great Recession, the cumulative lost number of existing home sales between 2007 and 2011 totaled more than 4 million, Crowe said. Moreover, the percentage of mortgages seriously delinquent has fallen and the decline has been larger in markets that had the highest rates.

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