WASHINGTON—While experts can't agree on future trends in the U.S. construction industry as a whole, regional economists paint a fairly consistent picture of upcoming housing growth in different parts of the country.
Economists Sara L. Johnson of Standard & Poor's Corp.'s DRI research service and Stanley F. Duobinis of the National Association of Home Builders presented their regional construction predictions at NAHB's semiannual Construction Forecasters Conference, held Oct. 29 in Washington.
Both predict housing markets in California and New England will achieve the highest growth during the next few years while the South Atlantic states from Delaware to Florida will continue to see the most building activity.
``With the best economy in over 30 years, one might expect all regional housing markets to continue growing, but this will not happen,'' Duobinis said. ``Housing activity was above trend for many states during 1996 and 1997, and it will slow to supportable levels in 1998 and 1999.''
Those states that have been slower to recover from the early 1990s recession will have more housing growth in 1998, he said.
``The Northeast and California will see positive growth in starts,'' he said. ``The remainder of the states will see a decline in single-family starts in 1998.''
S&P's Johnson came to the same conclusions: ``California and New England are markets that have been lagging in the recovery.''
But Johnson predicts higher employment and population in both regions for the next few years that will spur higher housing demand.
``There is a close correlation between population growth and employment growth,'' she said. ``And population growth drives demand for housing.''
California also will experience less migration to other Western states as the state's economy picks up, Johnson said, keeping demand for housing high.
On the gloomier side, Johnson predicts that building product exports from the West will suffer as a result of economic weakness in Asia. The Pacific states count on Asia for as much as 60 percent of their exports, she said.
But housing markets should not suffer because of that economic weakness, Johnson said, since the housing supply, especially in California, is lean.