The National Association of Home Builders' chief economist has dialed back his housing starts forecasts to annual rates of 630,000 in the final quarter of this year, 970,000 in the same quarter in 2011, and 1.36 million in the last three months of 2012. He also warns that the size of the housing industry's revival next year will vary dramatically by state.
David Crowe gave those updated numbers Sept. 30 in Chicago during the American Housing Conference, an event sponsored by ProSales' corporate parent, Hanley Wood LLC. The forecasts are 16.4% below the 754,000 starts rate for the final quarter of 2010 that he forecast in January during the International Builders' Show. He also cut 20.5% from his earlier prediction of a 1.22 million starts rate in the final quarter of 2011. (Story)
Crowe's reduced outlook matches the modest predictions that other groups have been making since the housing market sputtered this summer. For instance, Hanley Wood Market Intelligence, a sister company to ProSales, is now predicting starts of 622,000 this year and 886,000 in 2011.
Crowe expects single-family starts will grow from roughly an annual rate of 515,000 in the final quarter of this year (down from January's forecast of 650,000) to an 810,000 rate in the last three months of 2011 (previous number: 886,000). Meanwhile, multifamily starts are now forecast to hit an annual rate of just 115,000 this quarter; in January it was 104,000. And for the October-December 2011 quarter, he now calls for a multifamily starts rate of 160,000 (down from 185,000).
In Chicago, Crowe also produced an updated version of a map he had produced this spring in which he compared each state's expected starts rate in the final quarter of next year with average production in those states for 2000 through 2003. The map indicates that the bottom 10 states will have production rates that will total no more than 54% of their 2000-2003 starts rates, while the next 10 will have 55% to 61% of their starts rates at the beginning of this decade.
The middle 10 states will be at 62% to 68% of their 2000-2003 averages, he added. The next 10 will move along at 69% to 79% of the benchmark, and only 10 states will be creating starts at 80% or more of their 2000-2003 averages.
Most of the sluggish states in the bottom 10 were in the areas worst-hit by the housing downturn--particularly California, Nevada, Arizona, Colorado, and Florida--or were in the industrial Midwest. In contrast, most of the top 10 states were in the Southwest or the Northern Plains regions.
