Positive housing indicators along with steady upward trends in recent months have caused industry professionals to point toward continued housing market growth in 2013. With more potential home buyers leaving their place on the fence and choosing to purchase new homes for sale, builder confidence growing, home prices rising, and inventory levels decreasing, the housing market does finally seem to be showing signs of a recovery. Although the nation’s housing market is not completely void of challenges going into the new year, real estate experts are fairly confident that good things are to come in 2013.
In his most recent economic forecast, chief economist for the National Association of Home Builders (NAHB), David Crowe, said that the steady slew of positive reports regarding new home sales, home prices, building permits, housing starts, and builder confidence over the past few months is, “…further confirmation that a gradual but steady housing recovery is underway across much of the nation,” he said. Crowe noted that the housing recovery has been primarily local, but it is spreading.
Many real estate professionals agree that 2012 served as a transitional year. Crowe agreed in his remarks, saying that the housing market is transitioning from when the demand for new homes for sale was lower, inventory levels were higher, and many potential home buyers simply sat on the fence and wouldn’t or couldn’t afford to buy into new home communities. Now, with record low mortgage rates, more new homes selling, demand higher than it’s been in years, and builder confidence rising, Crowe says that, “…the new home stock will be a much more important element of the recovery.”
The number of improving markets throughout the nation is increasing. As of December, the NAHB/First American Improving Markets Index (IMI) stands at more than 200 metro areas out of 360 markets which have shown improvement in housing permits, home prices, and employment for at least 6 months in a row. This number has improved significantly since the IMI was first launched back in September of 2011, and the index only stood at 12 improving markets out of 360. Crowe says that one of the main factors contributing to this substantial jump in the IMI, is recovering home prices. On a national level, home prices have increased by 6% since early 2011, when prices bottomed out.
The NAHB is predicting that new single-family home starts will climb 23% this year and single-family new home production will register a healthy 21% gain in 2013. In addition, the NAHB projects that new single-family home sales will show a 20% increase this year, and are anticipated to rise by 22% next year.
Since mortgage rates are expected to remain near record lows through 2013, and the demand for new homes for sale is higher than in past years, these projections indicate that, based off of this year’s trends, builders will respond to the demand that is in place, and will increase new home construction. With a rise in home starts, potential buyers will find a greater supply of new affordable homes for sale. The expectation is also that – with a greater supply of new homes, plus lower mortgage rates, plus a growing number of healthier markets – future home buyers will take advantage of favorable market conditions and will purchase these new homes for sale, leading to that gain in home sales the NAHB forecasts for 2013. There are still challenges ahead, but the 2013 housing market outlook for the nation remains optimistic.