RE: Housing startsResidential Construction Recovery Delayed Further
08/24/2011 by Jim Haughey, RCD Chief Economist
Housing will feel an immediate negative impact from slower economic growth caused in part by reduced confidence. Single-family starts will be further depressed as cautious consumers defer purchases over concern about income security and heightened threats of tax increases. Some of this will spread to remolding as existing home sales growth is also trimmed. Multifamily starts will continue to rise with employment gains, which will boost occupancy rates, allowing for rent increases. However, developers will delay some starts in late 2011 and early 2012 to rebalance inventories with the now lower expectations of job growth.
The forecast is for residential construction spending to shrink 2.5% in 2011 (previously 1.5%) and then rise 7.7% in 2012 and 14.0% in 2013. Previously, spending was projected to grow about 20% in both 2012 and 2013.
The forecasts cited by Madisons are very much out-dated, having been made early in 2011. Even the same forecasters cited, i.e., Reed Construction Data have downgraded their views for 2012 and 2013, to 685,000 and 800,000 respectively (2011 = 597,000). Reed Construction doesn't expect an incremental gain (off of today's level) of 250,000 starts until at least 2014....and in fact, are more conservative than NAHB and NAR.