Economists at the International Builders' Show predicted that single-family housing starts will continue to move on a gradual, upward pace in 2020, fueled by solid job growth and low mortgage rates.
The economists gave their forecasts at a Jan. 21 news conference at the show in Las Vegas.
"Low resale inventory, favorable mortgage rates, historically low unemployment and accelerating wage growth are driving builder sentiment and point to single-family production gains in 2020," said Robert Dietz, chief economist at the National Association of Home Builders, which organizes the IBS trade fair.
"At the same time, builders are still underbuilding as they continue to struggle with rising construction costs stemming from excessive regulations, a chronic shortage of workers and a lack of buildable lots. These affordability headwinds are impeding more robust construction growth."
A recent NAHB report covering the last 10 years of homebuilding found that, adjusted for population changes, single-family construction in the 2010s operated at around half the pace of the rates from the 1980s, 1990s and 2000s. NAHB said that level of underbuilding, buoyed by what the trade association said were supportive monitory policy conditions, indicate that homebuilding will expand in 2020.
Total housing starts — including both single-family and multifamily dwellings — are expected to reach 1.3 million units in 2020, up more than 2 percent from 2019. Although that would represent the highest output since 2007, NAHB officials said it is still well below the production levels from 1960 to 2007, when the total number of starts averaged 1.5 million units a year.
Single-family housing starts should increase more than 3 percent from 2019, to about 920,000 units — still significantly less than the 1 million to 1.1 million units the trade group said demographics should be able to support. Some of the shortfall is from young adults who live at home, NAHB said.