Home builders should have a good year in 2015, says the National Association of Home Builders, as pent-up demand, continued low mortgage rates, improved employment rates and a growing economy are forecast.
“Single family builders are feeling good,” NAHB chief economist David Crowe said recently. “They are not overly confident, but confident enough to keep moving forward.”
The home builders group announced that it is expecting a 26 percent increase in single-family home construction in 2015, reaching more than 800,000 units. For 2014, single-family home production was expected to end the year with a 2.5 percent increase to 637,000 units.
By 2016, construction on 1.1 million new single-family homes is expected, the home builders association said. As a benchmark for normal activity before the Great Recession, the number of single family homes built in the 2000-2003 period was 1.3 million a year. The housing market bottomed out in 2009 when there was only 27 percent of normal activity.
Job growth is expected to be strong, the economist said, with many young people who had delayed buying – and possibly moved back home or doubled up in rented apartments to save money – now ready to buy their own homes.
The housing recovery will continue to vary by state and region, with those areas with highest employment levels recovering the fastest.
Middle America states that are experiencing economic revival through energy production – Texas, Louisiana, North Dakota, Oklahoma and Wyoming – are seeing the strongest comebacks in their housing markets.
The top 10 major cities topping the Leading Markets Index list in housing growth are:
1. Baton Rouge, La.
2. Austin, Texas
3. Honolulu, Hi.
4. Oklahoma City, Okla.
5. Houston, Texas
6. Los Angeles, Calif.
7. San Jose, Calif.
8. Salt Lake City, Utah
9. New Orleans, La.
10. Charleston, S.C.
Among smaller market areas – those with populations of less than 500,000 – those with the strongest home building growth are:
1. Midland, Texas
2. Odessa, Texas
3. Grand Forks, N.D.
4. Bismarck, N.D.
5. Casper, Wyo.
6. Johnson City, Texas
7. Abilene, Texas
8. Corpus Christi, Texas
9. Florence, Ala.
10. Lafayette, La.
At the other end of the spectrum are cities and states that have the biggest employment challenges – Rhode Island, New Jersey, Alabama, Nevada, Arizona and New Mexico.
Another area that is showing strong growth is the 55-and-over market. As 10,000 Baby Boomers turn 65 every day, the third quarter of 2014 saw the biggest jump in single-family development since 2008.
“The consistent rise in home equity has contributed to the strong gains in the 55+ housing market,” Crowe said. “Many consumers who had been sidelined due to the inability to sell their current homes at an acceptable price are now in a position where they can sell their homes, enabling them to rent or buy in a 55+ community.”