US builders' group forecasts 2009 housing recovery

22 October 2008 15:55  [Source: ICIS news]

WASHINGTON (ICIS news)--Sales of existing homes and construction of new single-family housing in the US should recover early in 2009 and could reach record levels seen during the 2003-2005 housing boom, a top sector economist said on Wednesday.

 

David Seiders, chief economist at the National Association of Home Builders (NAHB), said that sales of existing new homes should begin to recover by the end of this year, followed by an upturn in new housing construction early in 2009.

 

Speaking at the association’s semi-annual construction forecast, Seiders said that new home construction eventually could return to the boom-year highs of around 2m units annually - but that it may take some considerable time to reach that level.

  

Seiders said that construction of single-family homes, now at a low point of about 550,000 units on a seasonally adjusted and annualized basis, should climb back to nearly 900,000 new homes annually by the end of 2010.

 

“I tell our builders that there is a lot of pent-up housing demand out there and that in the long term we’ll be back up to 1.8m or 2m new homes built annually,” Seiders said.

 

“But they tell me, ‘but in the long term we’ll be dead’,” Seiders added, indicating that many US home builders think they might not survive the downturn.

 

Seiders said that conventional fixed-rate home mortgage loans should hold in the 6-7% rate through 2010 and would facilitate recovery in the housing sector.

 

In addition, he forecast that US payroll employment growth - which has been in decline since late last year - should begin to recover early in the new year and move into positive territory by mid-2009 with further growth in 2010. 

 

Along with continuing low mortgage interest rates and low home prices, those employment gains would also help drive a recovery in the new home construction market, he said.

 

The US housing industry, especially construction of new single-family homes, is a crucial downstream consuming sector for chemicals manufacturers. 

 

A wide range of chemicals and derivative products is used in new home construction, including plastic pipe, insulation, paints and coatings, adhesives and synthetic fibres, among many others.

 

The American Chemistry Council (ACC) estimates that each new home built in the US involves use or installation of some $16,000 worth of chemicals or derivative products.

 

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By: Joe Kamalick
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