Moderate housing growth forecast for 2019
Economic experts see slight rise for new home construction in 2019.
LAS VEGAS – At the 75th edition of the International Builder’s Show, National Association of Home Builders (NAHB) Chief Economist David Dietz said he expects the industry to see moderate growth in 2019.
Dietz, along with a panel of economic experts who provided their economic outlooks for 2019 at the Las Vega Convention Center, also suggested that there is no major threat of a recession on the near horizon.
The NAHB is projecting 1.26 million total housing starts for 2018, and it expects overall production to inch up 0.8% in 2019 to 1.27 million units.
Single-family starts are expected to hit 876,000 units in 2018, and rise an additional 2% to 894,000 this year.
“Ongoing job creation and solid household formations will keep demand firm, but builders will continue to grapple with supply-side headwinds that will dampen more vigorous growth in the single-family sector,” Dietz said.
Hurdles include a short supply of construction workers; a shortage of buildable lots; regulations; tariffs on lumber and building materials; and a slow growth in acquisition, development and construction loan activity that is failing to keep pace with demand.
Also, home price appreciation over the past year has outpaced wage gains leading many to stay put in their current house. The NAHB expects residential remodeling activity to grow at a rate of 4% in 2019 and 2% in 2020.
But affordability issues that have plagued the housing industry could get worse in 2019. The NAHB expects interest rates to gradually rise and predicts 30-year fixed-rate mortgages will average 4.81 percent in 2019 and 5.08 percent next year.
On the multifamily side, NAHB is expecting multifamily starts to hit 386,000 units in 2018 and level off 2 percentage points to 379,000 this year.
David Berson, senior vice president and chief economist at Nationwide Insurance, said there is a low risk of a near-term recession. However, he said that economic growth is expected to slow modestly this year in response to trade and tariff issues, higher interest rates and diminishing fiscal stimulus from the 2017 passage of the Tax Cuts and Jobs Act.
Berson expects the Federal Reserve to tighten interest rates two or three times this year, with fewer moves in future years. This anticipated action, along with inflation edging higher, should result in a modest rise in 30-year mortgage rates in 2019.
“The start date for the next recession is uncertain, but the odds rise as we look out two to three years,” Berson said.
Frank Nothaft, chief economist at CoreLogic, is positive about the coming months.
“I’m pretty optimistic about the spring home buying season,” he said.
Nothaft forecast a 3% rise in new homes sales for 2019 and said remodeling spending could grow by as much as 5.1% this year.
The International Builders’ Show runs through Feb. 21. Visit HBSDealer.com for more coverage.
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