US housing sector on track for 2012 recovery - economist

25 April 2012 20:35  [Source: ICIS news]

WASHINGTON (ICIS)--The US housing industry is on track for a recovery that should take hold this year and build momentum into 2013, a top industry economist said on Wednesday, predicting that the nation will see 500,000 new housing starts this year.

David Crowe, chief economist for the National Association of Home Builders (NAHB), said despite some recent negative numbers on new and existing home sales and declining builder confidence, the housing sector is poised for a 2012 recovery.

Speaking at the association’s semi-annual housing construction forecast, Crowe said home building will begin its recovery this year “and build momentum this year and into next year”.

“We should reach 500,000 housing starts in 2012 and it will be even more solid in 2013,” he said.

In normal economic times, the US would see new homes - single-family and multi-family units - built and sold at a pace of around 1m to 1.5m annually.  During the housing boom years of 2004-2006, housing starts were running near, at and even above 2m units annually.

In the core market for new single-family homes, US sales have been in the range of 300,000-325,000 units for much of last year and into 2012, a pace that Crowe has earlier described as “just running at idle”.

The housing market is a key downstream consumer sector for the chemicals industry, driving demand for a wide variety of chemicals and chemicals-based products such as plastic pipe, insulation, paints and coatings, adhesives and synthetic fibres, among many others.

The American Chemistry Council (ACC) estimates that each new home built represents some $15,000 (€11,400) worth of chemicals and derivatives used in the structure or in production of component materials.

“This year we’ll see a decent sales market,” Crowe said.  “Not a great market, but a decent one.”

He said with the US economy in a continuing if slow recovery, an unemployment rate that while still high is in decline, and home prices and mortgage interest rates at or near historic lows, the housing market is poised for recovery.

($1 = €0.76)

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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