“Single-family builders are feeling good. They are not overly confident, but confident enough to keep moving forward,” said NAHB Chief Economist David Crowe. He added that the single-family sector will finish out the year much stronger than it began and set the stage for a robust 2015.
“This is mostly due to significant pent-up demand and steady job and economic growth that will allow trade-up buyers who have delayed home purchases due to job insecurity to enter the marketplace,” said Crowe.
NAHB is forecasting 991,000 total housing starts in 2014, up 6.6% from 930,000 units last year. Single-family production is expected to rise 2.5% this year to 637,000 units, increase an additional 26% next year to 802,000 and reach 1.1 million in 2016.
Setting the 2000-2003 period as a benchmark for normal housing activity when single-family production averaged 1.3 million units annually, single-family starts are expected to steadily rise from 48% of the benchmark in the third quarter to 90% of the benchmark by the fourth quarter of 2016, according to NAHB
Meanwhile, the NAHB Remodeling Market Index, which averages ratings of current remodeling activity with indicators of future activity, matched its all-time high of 57 in the third quarter and has been above 50 for six consecutive quarters. A reading above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower.
NAHB is forecasting that residential remodeling will post a 3.4% decline in 2014 over last year, due in large part to slow activity in the first quarter caused by an unusual harsh winter throughout much of the nation. However, residential remodeling activity is expected to rise 2.7% in 2015 and an additional 1.3% in 2016.
A growing economy, rising household formations, low mortgage rates and pent-up demand will help single-family housing production to rev up in 2015, according to economists who participated in National Association of Home Builders (NAHB) 2014 Fall Construction Forecast Webinar.