With economic indicators continuing to trend upwards, the nation's housing industry should grow in 2013, according to the National Association of Home Builders' (NAHB) recently released economic forecast.
Single-family home starts are projected to reach 534,000 units when 2012 is tallied, up 23 percent from 2011. NAHB is forecasting that single-family new-home production will post a healthy 21 percent gain in 2013 to 647,000 units annually. Further, starts should continue their upward climb in 2014, posting a 29 percent rise to 837,000 units.
Meanwhile, new single-family home sales are expected to rise from 307,000 in 2011 to 367,000 for the full 2012, a 20 percent rise. Sales are anticipated to climb to 447,000 in 2013, up 22 percent from 2012. In 2014, sales should jump to 607,000, a 36 percent increase over 2013 levels.
The number of improving housing markets across the nation continues to improve. When the NAHB's Improving Markets Index (IMI) was launched in September of 2011, only 12 metropolitan areas out of 360 were on the list. As of December 2012, the list stands at 201 metro areas.
"One reason we have seen such a significant jump in the IMI is because house prices are beginning to recover," said the NAHB's chief economist David Crowe. "House prices bottomed out early in 2011 and since early 2012 we've seen a 6 percent increase on a national basis."
Another factor spurring the recovery is that household formations are on the rise. In the early part of the decade, the nation was generating 1.4 million new households each year. This collapsed to 500,000 annually during the housing downturn, and currently new household formation is near an annual rate of 900,000.
And as new households form at a growing rate, so does builder confidence. The NAHB/Wells Fargo Housing Market Index, which measures builder confidence in the single-family housing market, has posted gains for eight consecutive months and now stands at 47. This is very close to what the NAHB has dubbed the "critical midpoint of 50," where equal numbers of builders view the market as good or bad. The HMI has not been above 50 since April of 2006.
"Consistent, positive reports on housing starts, permits, prices, new-home sales and builder confidence in recent months provide further confirmation that a gradual but steady housing recovery is underway across much of the nation," Crowe said. "However, stubbornly tight lending standards for home buyers and builders, inaccurate appraisals, and proposals by policymakers to tamper with the mortgage interest deduction could dampen future housing demand."
