Will Push Home Building Demand
Tuesday, June 7, 2016
By Robert Dietz
NAHB's chief economist Robert Dietz says U.S. population growth provides a positive outlook for the home building industry.
The future of home building, multifamily development, remodeling, and land development in the U.S. looks strong, despite ongoing challenges associated with industry expansion and rising regulatory concerns. And I am pleased to report on these conditions as NAHB’s new chief economist; I took the reins from David Crowe, who recently retired after a distinguished, 40-year career as a housing economist.
Despite occasional sluggishness, a positive growth trend is in place. In 2009, there were just 445,100 single-family starts. That annual total rose more than 60 percent, to 714,500, in 2015. And there is plenty of room to grow, with a potential sustainable rate of construction equal to 1.5 million single-family homes a year. However, supply-side headwinds, most notably the three “Ls” (lots, labor and lending), are constraining the speed at which the industry can increase production.
As the industry recruits new workers and develops new lots, construction will expand to meet rising demand. The NAHB expects single-family building to post a gain of at least 14 percent in 2016, rising to more than 800,000 starts. And multifamily development should be able to maintain a production level of just under 400,000 starts this year. The remodeling sector should post small gains, despite flat conditions for existing-home sales, due to supporting factors such as an increasing need for aging-in-place and energy-efficiency improvements.