Las Vegas — Economist David Crowe projects an 18 percent jump in the number of new single-family housing starts to 840,000 and a 5 percent increase in multi-family units to 417,000, adding that there are also a number of other positive indicators that should bode well for 2017.
“There's solid evidence this should be a good year for the economy and for housing,” Crowe, the economist for the National Association of Homebuilders, said Tuesday as he offered his yearly housing prediction — a 1.2 million total for 2016 — at the International Builders Show.
Crowe said its possible 2017 will be even better with almost 1.1 million new single-family houses built — a 30 percent increase over his projection for this year — if first-time buyers return to the market. They could be spurred by rental costs rising so much that a mortgage looks attractive.
Overall, Crowe had good news for building products makers, developers and contractors. The building and construction sector is second only to packaging for use of plastics with the most applications in roofing, insulation, wall coverings, windows, piping, composite wood decks and house wraps.
Crowe pointed to a new a report released at IBS by the Society of the Plastics Industry Inc. that he contributed to about the increasing use of plastic materials to make buildings more air tight, durable, water resistant and less expensive to construct, maintain and operate.
“From floors to roofs, inside and outside of walls, plastics are a go-to product on construction sites around the world,” SPI President and CEO Bill Carteaux said in a press release about the “Plastics Market Watch: Building and Construction. “Innovation in the plastics industry to improve and diversify products is matched by the building and construction sector's pace to find and use new solutions to address fundamental issues like structural integrity, energy savings, recycling and cost savings.”
For this year's sector forecast, Crowe said employment was relatively strong for 2015, averaging 245,000 jobs on a monthly basis, which is critical to the housing market right now. Jobs mean income, which lets people take on a 30-year
For this year's forecast, Crowe said employment was relatively strong for 2015, averaging 245,000 jobs on a monthly basis, which is critical to the housing market right now. Jobs mean income, which lets people take on a 30-year mortgage.
Also, the overall economy, although up and down, has shown strong and consistent growth in terms of consumer confidence and consumption, which Crowe said is an important part of the gross domestic product and the output of the country.
“That really is a sign that we've begun to move forward because the consumer is moving forward and feeling good about the economy and buying things,” Crowe said.
In addition, home building has started to surge, moving at a faster pace in the last three quarters than it had before, Crowe noted.
“It's finally adding strength to the economy rather than pulling strength away,” he said.
He also touched on what is happening in China, saying that it should be no surprise that its economy is slowing down and it shouldn't be a major cause for concern. U.S. exports to China comprise only 8 percent of its total exports, Crowe added, so any slowdown there shouldn't have a dramatic effect on the rest of the economy here.
In addition, low mortgage rates have kept loan rates low and today they are really no higher than last month when the U.S. Federal Reserve announced the short-term rate increases. Coupled with rising rents, young adults are likely to make home buying their first option over leasing.
Still, challenges remain with the labor shortage in the construction industry a top concern for builders going into 2016. Worries about lot availability followed by sales of existing homes sales, which remains low and results in fewer buyers overall.
Crowe called his projection for 1.2 million new homes a “modest” increase compared to nationwide housings starts for 2015, which jumped by 10.8 percent, according to data released by the U.S. Commerce Department on Jan. 20.
The federal agency said there were 1.11 million units started in 2015 for both single and multi-family units while single family starts alone climbed 10.4 percent to 715,000 units.
Crowe said there's a little stronger recovery on the single-family side while the multi-family side may only move forward a little because it has been hot for the last four years thanks to the popularity of renting.