Magazine article Mortgage Banking

Home Builders See Rebound in the Making

Magazine article Mortgage Banking

Home Builders See Rebound in the Making

Article excerpt

After five years of steady declines, the latest key eco AT Wk nom ic indicators are now telling the National Association of Home Builders (NAHB), Washing ton, D.C., that a rebound is in the making for the beleaguered housing market-Any recovery in 2012 will be modest. But after a year in which housing starts were the lowest since 1942 and new-home sales were the lowest ever, David Crowe, the NAHB's chief economist, is just happy the signs are pointing up. "We're so far down, we almost have to see some improvement," Crowe said at the NAHB's annual convention in Orlando, Florida, in January Nationally, Crowe is expecting single-family starts to increase to almost 500,000 this year and 660,000 in 2013. Thai's off the rock-bottom 429,000 houses that were started in 2011.

The NAHB is projecting an even larger gain in the multifamily sector. Builders are expected to put up a total of 208,000 apartments this year, up from 177,0001112011--235,000 more units in 2013.

But both figures are "well below" the 350,000 units a year needed to maintain a balanced rental market, said Sharon Dworkin Bell, the group's senior vice president for multifamily and 50 plus housing. And after accounting for starts that are not "pure" rentals and the units taken out of service, the net gain will be a mere 30,000, according to Ron Witten, president of Witten Advisors, a Dallas-based research firm.

On the single-family side, Crowe warned that states that suffered the worst declines will be the ones that improve the slowest. Consequently, jurisdictions that account for 20 percent of total national production will rebound faster than those normally accounting for half the yearly output. So the overall improvement isn't likely to move the needle very far, Crowe warned. "North Dakota can triple its output and it will never show up in the national numbers," he said.

The NAHB's relatively strong prognosis was shared by two other well-known housing economists who spoke during the conference, which drew 50,000-plus builders and allied professionals.

Frank Nothaft, chief economist at Freddie Mac, said that while the economy continues to send mixed signals and "the clouds haven't fully cleared," hopes are starting to rise for a continued gradual recovery. Nothaft said that while housing prices "have a little ways to go" before they hit bottom, they are likely to stop falling by midyear. …

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