The National Association of Home Builders' (NAHB) chief economist slashed today his earlier forecast for single-family housing starts, now predicting 2011 will show no change from the 471,000 starts recorded last year.
David Crowe also reduced by 19% his previous prediction for single-family starts in 2012, saying during a webinar that he now expects 698,000 starts next year. In January, during the International Builders' Show, Crowe had said he expected 575,000 single-family home starts this year and 860,000 next year.
Crowe also said he expects 140,000 starts of multifamily housing units this year, up from 114,000 starts in 2010. In 2012, he looks for a further 25% growth to 175,000 starts.
Crowe based his predictions in part on assumptions that home rices will keep deteriorating in 2011, interest rates will stay low, government-sponsored enterprises like Fannie Mae and Freddie Mac won't get revamped before 2013, oil prices will stay at current levels, and the value of the dollar will remain weak against other currencies.
The current housing market really is a tale of two economies, he said. On one hand, mortgage rates are low, housing prices are returning to normal, housing affordability and vacancy rates are good or at least improving, and a rising number of households eventually will cause increased demand. But on the other hand, consumer and builders' confidence is low, home prices haven't rebounded from their peaks of a few years ago, and millions more people are out of work than there were in the middle of the last decade.
Robert Denk, vice president of forecasting and analysis at the NAHB, said that while housing starts have fallen, risen and fallen over the past 18 months, he does not predict another decline as drastic as the one experienced between 2006 and 2009.
“People talk about a 'double-dip,' but I don't see that happening,” said Denk.
Denk also compared the fourth quarter housing starts and predictions for 2010, 2011, and 2012 against the average housing starts for 2000 through 2003. Currently, starts are running at about 31% of the 2000-2003 average, he said. By this year's fourth quarter, he expects that number to reach 41% and then keep rising to 60% in the fourth quarter of 2012.