LAS VEGAS — Demand for new single-family homes is projected to increase by as much as 26 percent in 2015, and if it does, building material makers will be supplying siding, windows and decks for 804,000 dwellings.
That's the ambitious outlook given Jan. 20 by David Crowe, chief economist for the National Association of Home Builders, in a panel talk at the International Builders Show in Las Vegas.
Crowe gave a long list reasons for his positive forecast, including economic growth near 4 percent in the last half of the year, employment gains averaging 250,000 a month in 2014, consumer confidence returning to pre-recession levels, and significant pent-up demand.
“My rough estimations are we lost or postponed about 7 million existing home sales,” Crowe said. “The normal flow of demographics leading people to move — a new job, more people in the family, fewer people in the family, more income — all those forces were continuing but the moves didn't take place because people were nervous about their economic future. They didn't have sufficient equity. There were a lot of financial reasons behind the slump.”
However, Crowe sees the flow normalizing and catching up a bit in the housing industry to a point where 2015 will be more robust than last. That shouldn't be hard, he added, considering 2014 wasn't a great year. The final number isn't in but the data to date indicates there were only 641,000 single-family housing starts in 2014.
Crowe had predicted 822,000 single-family starts for last year. He said his forecast was off because of the long, cold winter hampered construction and kept people from shopping for new houses. Then, an interest rate hike followed.
“That compounded and extended the slow beginning,” Crowe said. “We had a decent ending of the year but it didn't make up for the slow start.”
Crowe's colleagues said they hope he is right but they think his projection is too aggressive again.
Some 10 percent of homeowners are still underwater — they owe more on their homes than the home is worth — and it's taking a long time for mortgage lending standards to ease up, said David Berson, chief economist for Nationwide Mutual Insurance Co.
“Those owners probably won't be looking to buy a house because they don't want to bring money to the table,” he said.