NAHB releases housing forecast
Las Vegas—The National Association of Home Builders is forecasting a soft landing for 2024, after two years that — for all intents and purposes — can be described as a housing recession. At least 2022 and much of 2023 “felt like a recession,” said Robert Dietz, NAHB’s chief economist.
Delivering an industry forecast here during Design & Construction Week and the International Builders’ Show, Dietz revealed expectations for single-family starts to rise over one million in 2025.
He presented the following numbers:
Single family units started
2022: 1,004,000
2023: 943,000
2024e: 988,000
Multi family units started
2022:547,000
2023: 472,000
2024e: 379,000
While single-family starts are expected to rise 5% in 2024, and then cross above the one million mark in 2024, the NAHB anticipates a sharp decline — about 20 percent—in multi-family.
Branching to other macro-economic issues, Dietz said the NAHB expects the Federal Reserve to begin lowering interest rates to a point where the 30-year-fixed rated by 2025 will be in the 5.9 percent or 5.8 percent neighborhood. And in coming in below the 6 percent threshold, those rates are expected to provide a strong psychological boost to demand.
Challenges to home building remain, and chief among them is the cost and availability of skilled labor.
“The challenge of the industry is to recruit, train and retain workers,” Dietz said. “And that’s something that’s goin to be with the industry for some time.”
Labor (71 percent) was the leading challenge expected to impact building costs in 2024, according to an NAHB builder survey. Labor was followed by building material prices (58 percent), cost/availability of lots (64%) and building code requirements (43 percent).
Interestingly the challenge of “Availability/time it takes to obtain building materials” declined from 37 percent faced in 2023, to 24 percent expect in 2024.
Joining Dietz in the forecast presentation was Danielle Hale, chief economist for Realtor.com, who said “housing is past peak unaffordability.”
Also on the forecast stage was Ali Wolf, chief economist for Zonda. She pointed to the divergence of existing home sales at the lowest point since 1995, and new home sales up 12 percent year-over-year.
She expects that contrast to continue in 2024.
From a geographic standpoint, the forecast pointed to hot homebuilding spots in Texas.
Metro Dallas and Houston are the top two markets in the country as measured by completions and starts. Together, the two markets have more single homes built than the entire state of California.
Dietz, who identifies as a Big Ten fan, alluded to the Southeastern U.S. when he said that “more than 50% of homebuilding is in SEC markets.”
The Design & Construction Week event continues through Thursday.