Tag Archive for 'new housing starts'

PCA: All 50 States Expected to Experience Housing Recovery in 2013

PCA Logop2013 Housing Starts Approach the One Million Mark

Since 2005, tepid economic growth and high foreclosure rates have depressed home prices, bloating inventories and preventing start activity. In 2013, economists are revising nearly a decade of pessimism and forecasting growth throughout the residential construction industry.

A new report from the Portland Cement Association (PCA) projects total housing starts to reach 954,000 units in 2013, reflecting further improvement on 2012’s nearly 30 percent growth.

“The possibility of one million starts in 2013 should not be dismissed,” PCA Chief Economist Ed Sullivan said. “Although the first half 2013 will be mired in a fiscal cliff hangover, we are decidedly optimistic about second half economic growth, job creation and consumer sentiment – all of which translate into a stronger home sales and starts activity.”

Even stronger growth in homebuilding is predicted to materialize in 2014 with starts surpassing 1.1 million.

In another optimistic turn from previous residential forecasts, PCA expects the recovery to be broad-based and is projecting all 50 states will see increases in single family housing this year. Already underway in the interior U.S., the emergence of accelerating construction growth has begun to appear in some the hardest hit states during the housing bubble burst. These regions are now likely to lead growth in coming years as the long depressed markets begin to return to housing construction rates consistent with their demographics.

“As the recovery unfolds, regions that once lagged recovery now begin to emerge as growth leaders. The Southwest and Southeast, for example, still have the weakest housing fundamentals on a relative basis to the Interior U.S, but on a construction activity basis, given the extremely depressed bases from which these regions are recovering from, they will likely be the housing growth leaders in coming years,” Sullivan said.

PCA expects multifamily construction to continue to grow at a strong pace as favorable fundamentals fuel the sector. Multifamily starts recorded a 55 percent gain in 2011 and 36 percent growth in 2012. PCA expects an additional growth of 15 percent in 2013 to 277,000 units. Damaged credit due to foreclosure activity and tight mortgage lending standards have combined to create robust apartment demand.

About PCA
The Portland Cement Association represents cement companies in the United States and Canada. It conducts market development, engineering, research, education, and public affairs programs. More information on PCA programs is available at www.cement.org.

Wells Fargo Securities Reports: Housing Starts Jump In September

Housing starts rose to a 658K-unit pace in September on the heels of an upwardly revised 572K-unit pace in the month of August. The gain was driven primarily by a 51.3 percent increase in multifamily starts.

Multifamily Starts Lead the Way

New housing starts jumped 15.0 percent in the month of September, after declining 7.0 percent in August. The volatile multifamily component rose an impressive 51.3 percent. The pace of multifamily home construction rose to 233K units, the fastest pace of building activity since October 2008. The sharp increase in multifamily construction continues to underscore the pickup in demand in the apartment market. The displaced individuals from the foreclosure process combined with the desire for individuals to maintain mobility in a tough job market have helped to support strong demand in the apartment segment. Single-family home construction also edged upward, rising 1.7 percent to a 425K-unit pace. The improvement comes after single-family construction declines over the past two months.

Regional Trends Highlight Differing Pace of Recovery

On a regional basis, the housing starts data highlight the differing pace of the housing market recovery across the country. Single-family construction activity remains depressed around the country. However, several regions did post sizable gains in multifamily construction activity. The largest jump in building activity occurred in the West, where total activity increased 18.1 percent in September, with the pickup driven by multifamily construction. Building activity in the West continues to improve faster than in other parts across the country, rising 22.6 percent over the past year, as the region comes off of very depressed levels. New construction in the South also posted a 15.7 percent increase, driven entirely by a 69K increase in multifamily starts. While there is a long road ahead for the home construction industry, there are some encouraging signs that regional stability is occurring.

Housing Permits Signal Some Pullback Ahead

The pace of building activity observed in September is likely not sustainable given the current economic environment. Housing permits, a leading indictor of future building activity, fell 5.0 percent for the month, with most of the pullback in permits occurring in the volatile multifamily component, which declined 14.5 percent. Single-family permits also fell slightly on the month, declining 0.2 percent. The ongoing waves of foreclosures combined with continually falling home prices remain the largest obstacle for sustainable improvement in single-family home building.

Slow Improvement Ahead

We continue to expect new home construction to gradually improve over the next several months. Given consumer preferences for the rental market, the improvement for the remainder of this year will likely continue to be reflected in multifamily building. Our forecast for next year is for an average of 610K new housing starts, improving to 740K in 2013.