After the longest and most severe housing recession in history, experts look for a solid single-family home construction rebound in 2015. Consistent job growth, increased demand from household formation and low interest rates all support the expected increase in demand for new detached homes.
The National Association of Home Builders (NAHB) announced in its 2014 Fall Construction Forecast Webinar that its chief economist, David Crowe, expects that housing starts will rise from 930,000 in 2013, to 991,000 in 2015, for a 6.6 percent increase. Of those starts, NAHB expects that 637,000 detached units will be started by the end of 2014, with the number rising to 802,000 in 2015, and hitting over a million in 2016.
Just as the Great Recession had varying degrees of impact across the country, so will the housing recovery. The current boom in North Dakota, Texas, Wyoming, Montana and Louisiana will promote the growth of single-family home construction. Las Vegas, one of the most hard-hit housing markets during the Great Recession, saw housing appreciation and growth in 2014.
A survey conducted among home builders in July 2014 by NAHB and Wells Fargo Bank indicated that builders in the West and Midwest regions showed the most optimism about the recovering housing market. According to their findings, builder confidence in the west rose from 53 to 59, while Midwest builders’ confidence jumped from 47 to 53.
While the Northeast saw an increase in confidence, it still lags behind all other regions, going from 34 to 37. According to NAHB, any rating over 50 in this survey indicates overall optimism and confidence from home builders.
Home builder optimism may be buoyed by the rebound in the apartment sector. According to the Department of Commerce, multi-family permitting reached its highest level in 2014 since 1989. A strong multi-family market precedes increased future demand for detached housing, based on strong employment trends and household formation.
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