Modest pace for new homes
LAS VEGAS — A robust U.S. economy and job market, plus low mortgage rates, should help keep the recovery in the new-home market going at a modest pace this year, but a return to pre-housing boom sales and construction levels isn’t imminent.
That’s the forecast that David Crowe, chief economist for the National Association of Home Builders, delivered Tuesday during a panel of economists at the trade association’s latest industry convention in Las Vegas.
And despite the U.S. economy’s mixed track record of growth in 2015, Crowe projects the economy will expand 2.7 percent this year, the strongest gain since before the Great Recession in 2008, as consumer spending continues to grow.
“There are a number of positive indicators out there that make me believe ... this will be a good year for the economy and for housing,” Crowe said. “Not only is housing finally driving some of that, housing is finally moving at a much faster pace than the economy.”
U.S. homebuilders are entering 2016 feeling better about their sales prospects than they have in years, thanks to rising home prices and gradually improving sales.
New-home sales climbed nearly 15 percent through the first 11 months of last year, while construction of single-family homes hit an eight-year high in November. The trends have helped lift construction hiring: Construction companies added 215,000 jobs last year, a 3.4 percent gain.
Even so, sales and construction have yet to rebound fully from the housing bust nearly a decade ago.
Whether that progress continues this year will depend largely on the U.S. economy continuing to improve.
That’s come increasingly into doubt lately. Faltering growth in countries like China, the world’s second-largest economy, and financial market turmoil have heightened concerns that the U.S. economy could be in for a stumble.
There aren’t any major signs pointing to that, however, argued another panelist, David Berson, chief economist at Nationwide Mutual Insurance’s Nationwide Economics.
“All of the economic data we look at in the last 50 to 100 years is not flashing warning signs right now,” Berson said. “The stock market is not a very good leading indicator of the economy. I’m not terribly concerned that the economy is going to fall into recession.”
He also predicted broad sustained growth for housing this year. The exception: Some of the markets where prices have been rising much faster than income, such as Dallas, or cities that have been reliant on the oil industry for jobs and are now being squeezed by the steel drop in oil prices.
The residential construction sector is still recovering from the housing bust and the Great Recession, which officially ended more than six years ago.
