Single-family and multifamily housing starts in 2013 are expected to post double-digit gains over 2012, driven by rising home prices, but rising costs and broken supply chains continue to hold back even stronger growth as the housing recovery evolves, according to economists at NAHB's Spring 2013 Construction Forecast Conference Webinar.
Single-family and multifamily housing starts in 2013 are expected to post double-digit gains over 2012, driven by rising home prices, but rising costs and broken supply chains continue to hold back even stronger growth as the housing recovery evolves, according to economists at NAHB's Spring 2013 Construction Forecast Conference Webinar.
NAHB Chief Economist David Crowe noted the ever-growing list of metropolitan areas on the NAHB/First American Improving Markets Index as a positive sign. The recent surge is almost all due to improvements in house prices across a broader number of markets, he added. Home price increases became more consistent in 2012, and the latest data shows a nearly 6 percent annual rate of home price appreciation nationally.
Growth in the housing sector is rising at a much faster pace than the overall economy during this phase of the recovery, Crowe added. The residential fixed investment component of GDP was up 17.5 percent in the fourth quarter of 2012 whereas total economic output only registered a 0.4 percent gain.
However, many builders are feeling pinched by rising costs. Prices of gypsum, softwood lumber and concrete are all above 90 percent of their housing boom peak, which is causing home construction costs to rise at a faster pace than appraised values, Crowe said.
As demand for housing gradually picks up steam, supply chains for building materials, developed lots and skilled workers will take some time to re-establish themselves in the aftermath of the Great Recession, the NAHB predicts.
Setting the 2000 to 2003 period before the housing boom as a time of normal residential building production, Crowe said that residential remodeling has returned to previously normal levels of the early 2000s and that remodeling activity is expected to register a 2.2 percent gain this year over 2012.
The single-family market, which must make up the most ground to return to its 2000-2003 level of production (1.3 million units), continues to make steady gains. NAHB is forecasting 672,000 single-family housing starts in 2013, up 23 percent from the 534,000 units recorded last year. Single-family production is expected to rise an additional 28 percent in 2014, to 858,000 units.
