Eleven areas will lead what will be a generally tepid year for new-home construction, while remodeling activity will slow through this winter before rebounding in 2011, an executive for Hanley Wood Market Intelligence (HWMI) forecast.

Jonathan Smoke, a HWMI senior vice president, presented his outlook to executives from several large building material dealers who gathered Wednesday for a ProSales roundtable during the International Builders' Show in Las Vegas. HWMI and ProSales share the same corporate parent.

Texas dominates HWMI's list of hot markets, with Houston, Dallas/Fort Worth, Austin and San Antonio all making the list. The rest are Denver; Washington, D.C.; Seattle; Portland, Ore.; Los Angeles; Chicago; and metropolitan New York.

Houston and Dallas lead the nation's list of metropolitan statistical areas in the numbers of building permits HWMI expects will be issued in 2010. Houston is forecast to issue 30,052 permits, up 13% from 2009, while Dallas/Fort Worth will issue 24,615, a 14% rise. The vast majority of permits in both those markets will be for single-family homes. In contrast, while metro New York ranks third in total permits at 23,141 (up 42%), its 15,157 expected multifamily permits will lead the nation.

Looking nationwide, Smoke saw mixed signals. "There are definitely places on an uptick," he told the dealers. Late last year the homebuilding market saw a bit of an uptick, perhaps because of the pending expiration of a tax credit for first-time home buyers. (That credit has since been revived and expanded.) "We're expecting gradual improvement through the year," he said.

On the other hand, HWMI is just forecasting 392,000 new-home sales (as opposed to starts or permits) in 2010, at least one-fifth less than the National Association of Home Builders predicts, Smoke said. And when one looks at the general health of a market--creating an index that weighs factors such as changes in home prices, the jobs pool, households, median income, and the unemployment rate--only one market in the U.S. scores above 50 on a 100-point scale, Smoke said. That's the Raleigh-Cary, N.C., market at 54.5. And when one compares 2010 prospects with activity in the same area in the past 30 years, no market is as much as 40% as busy as it was at its peak, Smoke said.

The HWMI executive also a new remodeling index HWMI has created that tracks the overall level of remodeling activity at 363 markets nationwide. That index suggests remodeling activity peaked between April and June of 2007 and will end up with a 17% decline by the time it bottoms out in October through December of this year. Activity will pick up slowly from that point, perhaps making up half it downturn by early 2014.

"People will continue to do projects, but the projects they're doing will dramatically drop in price," Smoke said.