“Builders remain cautiously optimistic about market conditions,” said NAHB Chief Economist Robert Dietz. “2016 should be the first year since the Great Recession in which the growth rate for single-family production exceeds that of multifamily. And we see single-family growth accelerating in 2017 as the supply side chain mends and we can expand production.”
Single-family production is expected to see a 14% gain in 2016 to 812,000 units, and another 19% boost to 964,000 units in 2017, the NAHB reported.
The NAHB predicts that single-family production, which hit a low of 27% of normal production in 2009, should hit 64% of normal by the fourth quarter of this year and reach 77% of normal by the end of next year. Single-family production is currently 54% of the NAHB’s healthy benchmark of 1.3 million units annually.
“Consumer surveys suggest the ultimate goal of millennials is to purchase a single-family home in the suburbs,” said Dietz. “We see growth for single-family looking ahead. The recovery continues and is dictated by demand side conditions and supply side headwinds.”
Len Kiefer, deputy chief economist at Freddie Mac, said this year’s home sales could be the best in a decade. He cited several factors that could push home sales forward: the expected acceleration of household formation, fewer defaults and foreclosures, and solid job gains in the wider economy.
“Demographic tailwinds are helping to propel the housing market forward,” Kiefer said.
The housing market will continue on a gradual upward trajectory over the next year, pushed by steady job growth, attractive interest rates and pent-up demand, according to economists who participated in a National Association of Home Builders webinar. However, a more robust recovery is being hampered by a continued shortage of lots and labor, along with tight credit for acquisition, construction and development loans.