Housing Starts Dip Again – “National Association of Home Builders” Lower Projections

The expected bad news for homebuilders was released by the National Association of Home Builders – the 2013 and 2014 forecasts for US single-family home starts has been lowered due to high interest rates that are slowing the growth rate of the housing market.

April projections showed single-family home starts are 672,000 for 2013, but that number has now been lowered to an expected 629,000. The 2014 number also dipped, from a forecasted 858,000 to an expected 826,000. However, even if the lowered 2014 projection is hit that would still be an increase of over 53% from the 537,000 housing starts in 2012.

In 2015, Chief Economist David Crowe expects to surpass the 1 million start mark, climbing to a projected 1.16 million starts. This would still only be “about 93 percent of ‘normal,’” according to Robert Dent, the National Association of Home Builders Vice President for forecasting and analysis.

According to Crowe, the housing slump was due to “…unexpected softness in the spring,” with mortgage rates rising over 1 percent from very low May rates. Sales of new and existing homes began to slow almost immediately.

Mark Zandi, the chief economist for Moody’s Analytics Inc. believes that the US needs to produce around 1.7 million new homes and apartments each year to provide replacement for obsolete residences and support population growth. This number would be a great jump from the 353,000 housing start low in March 2009, but still far short of the peak number of starts of 1.82 million back in January 2006.

While homebuilders continue to see growth, the overly optimistic signs from July are beginning to marginally reduce, winding down quite a volatile 2013 on a low swing. SBS Group can help minimize the unpredictable housing market effects with solutions that can provide flexibility to maneuver through the competition. Contact us for more information and to speak with an industry expert.

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