US home builders see housing recovery growing through 2014

17 October 2012 20:52  [Source: ICIS news]

WASHINGTON (ICIS)--US home builders expect that the developing recovery in the nation’s housing market will continue for the rest of this year and beyond, but that the sector will not reach near-normal levels until 2015 or later.

In its regular semi-annual housing forecast, the National Association of Home Builders (NAHB) said that it foresees single-family housing starts for this year to reach 528,000 units, a gain of nearly 22% from the 2011 level of 434,000.

NAHB chief economist David Crowe said that the trade group expects single-family housing starts to reach 665,000 in 2013 and 865,000 in 2014.

While those forecasts anticipate a much stronger US housing market than the 353,000 single-family home starts at the March 2009 bottom of the sector’s recession, the 2014 forecast of 865,000 units is still below the 1m or more new homes built annually in the 1995-2003 period before the housing boom years of 2003-2006.

During those boom years, single family housing starts were running in the 1.5m to 1.8m range annually.

Crowe cited the Commerce Department’s housing starts report for September issued earlier on Wednesday, showing “surprisingly strong growth” of 15% compared with August.

The department said that housing starts last month were at a seasonally adjusted annual pace of 872,000, the highest level since July 2008.

“The extra building surge in September confirms the steady build-up in builder confidence that has increased for six consecutive months,” Crowe said.

“Builders have been saying that the potential home buyers they see are now more serious about buying, which has increased builders’ confidence enough to start additional homes,” he said.

Although the September housing starts report was strong, Crowe cautioned that “total housing construction remains at less than half a normal market output as many consumers remain on the sidelines or have insufficient credit or income to make that leap”.

“As consumer confidence rises and jobs return, more consumers will join the buyer market,” he said, “and I expect housing construction to continue a modest but fairly steady rise throughout 2013 and into 2014.”

Crowe also noted that bank lending standards for home mortgages and home builders’ development loans remain tight, imposing constraints on home building and sales.

In addition, he said, “people are still worried about their employment picture, so many remain reluctant to make a major purchase” and “seriously delinquent mortgages are still high”.

The still-high rate of delinquent mortgages suggests that home foreclosures will continue to flood the market with empty homes, complicating the market for new housing construction.

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

The American Chemistry Council (ACC) estimates that each new single-family home built represents some $15,000 (€11,550) worth of chemicals and derivatives used in the structure or in production of component materials.

($1 = €0.77)

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


By: Joe Kamalick
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