Home Builders’ Association Members Discuss Economic Outlook

The National Association of Home Builders (NAHB) International Builders’ Show in Las Vegas recently showcased economists providing insights into the 2024 housing market. Despite a recent dip in single-family starts attributed to higher interest rates, experts are optimistic about a gradual production increase later in the year, aligning with the Federal Reserve’s planned rate cuts. The emphasis is on combating housing inflation, particularly shelter inflation, with NAHB projecting two or three Fed rate cuts that will exert influence on mortgage rates.

While the prospect of rate cuts brings positive news for builders and housing affordability, challenges loom in the form of anticipated supply shortages and increased prices for essential resources like lumber, lots, and labor. The forecast for 2024 includes a notable 4.7% increase in single-family starts, a crucial step toward addressing the nationwide shortage of housing units. In contrast, multifamily starts are expected to experience a decline due to tight credit conditions, with a potential rebound projected for 2025. Builder optimism is apparent, with 80% anticipating a rise in starts for the year.

The demographic landscape of home buying is evolving, with boomers taking the lead in 2023. While housing affordability remains a pressing concern, there are indications that the market might have reached its peak unaffordability in October 2023. To tackle shortages and ease affordability concerns, there’s a resounding call for an increase in housing inventory. Inventory trends, however, show regional disparities, with New England and the Midwest grappling with limited supply while the South and West exhibit signs of recovery.

 

Read the full article from CONTRACTOR here.

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