Single-family and multi-family housing starts are predicted to post double-digit gains this year over last year, according to the National Association of Home Builders. NAHB says that the market could post even stronger gains but several factors are holding back the recovery.
The biggest obstacles? Labor and lot shortages, rising costs of building materials, obtaining construction credit, and overly restricting mortgage-lending rules are hampering the market, NAHB economists noted during NAHB’s recent Spring 2013 Construction Forecast Conference webinar.
“As demand for housing gradually picks up steam, supply chains for building materials, developed lots, and skilled workers will take some time to re-establish themselves in the aftermath of the Great Recession,” NAHB notes.
For example, prices of building components — such as gypsum, softwood lumber, and concrete — are above 90 percent of their housing boom peak.
As such, home construction costs are rising at a faster pace than appraised values, says David Crowe, NAHB chief economist.
Still, there are plenty of positives to point to in the recovery, NAHB notes. Home prices are posting solid gains, with nearly a 6 percent annual rate of home price appreciation on a national basis. Growth in housing is rising at a faster pace than the overall economy, Crowe says.
Notably, North Dakota, Texas, Oklahoma, Wyoming, Montana, and Louisiana — all energy-producing states — are the first projected to return to normal production of homebuilding levels by next year, says Robert Denk, NAHB's assistant vice president for forecasting and analysis. Denk also noted that Iowa is also approaching a faster return to normal conditions.