Home construction cooled in the final quarter of 1995, and now the National Association of Home Builders is predicting fairly flat years in 1996 and 1997. Washington-based NAHB forecasts housing starts to grow a modest 4 percent for the year, at 1.4 million starts.
Building industry officials will be watching low interest rates and a moderate-growth, low-inflation economy.
``We're not declaring the deathof the business cycle, since unpredictable shocks can hit the system from home or abroad at almost any time, and since struc-tural imbalances can develop,'' said David Seiders, NAHB's head economist, in an outlook published in November.
Low interest rates and low, stable inflation have restored a ``back to the '60s'' environment, he said.
Housing activity is a main driver of the economy. Construction is the second-largest user of plastic resin, mainly consuming PVC, for siding, windows and doors and acrylic and other resins for sinks, showers and other products. New homes also spur sales of washing machines and other appliances. The average new house contains some 3,400 pounds of vinyl resin, according to Occidental Chemical Corp.'s Vinyls Division in Dallas.
NAHB leaders also are encouraged by solid action to get a balanced budget - even if the federal government has delayed the release of important home construction statistics, said Michael Carliner, economist for the Washington trade association. ``We like the idea of them moving toward a balanced budget. It's a messy business,'' Carliner said.
Of the 1.4 million housing starts predicted for 1996, 1.1 million will be single-family homes and the other 300,000 will be multifamily.
Home building was very weak during the first half of 1995. The third quarter was very strong, then business softened again in the fourth quarter, Carliner said in a telephone interview Jan. 5.
The NAHB will issue more detailed predictions at the Builders' Show in Houston Jan. 26-28.
Carliner said recent reports have shown the house sizes are not increasing. That surprised the NAHB, which continues to believe demand will grow for bigger homes. Current very low interest may drive some homeowners to trade up to bigger dwellings, he said.
PVC water pipe could get a boost by higher government-financed infrastructure spending, via proposed amendments to the Safe Drinking Water Act, approved by the Senate in late November.
According to the National Utility Contractors Association in Arlington, Va., the bill would authorize $1 billion a year for 1995 through 2003 for grants to states for improvements to drinking water and waste water and create new revolving loan funds for drinking water. Congress, for the past two years, has approved money for that purpose, but final legislation slashed the funds.
The new bill could mean ``the construction industry would prosper as states focus on repairing and replacing crumbling infrastructure,'' NUCA said in the January issue of its magazine, The National Utility Contractor. Regulatory costs also would be reduced.
The PVC pipe industry monitors federal funding for water systems - both waste water and drinking water. Robert Walker, executive director of the Uni-Bell PVC Pipe Association in Dallas, said a big battle in Congress continues between environmentalists and business over the Clean Water Act. ``The real controversy has been over the wetlands,'' Walker said.
