While we may be skewing conservative in our forecast for 2012, we are expecting improvements ahead. The latest Hanley Wood forecast calls for new-home sales nationally of 367,000 in 2012. Depending on where 2011 officially ends, that’s probably a gain of 14 percent to 20 percent. After seven years of decline, a 14 percent increase in new-home sales sounds very good to most of us.
Expecting the first small step of improvement in new construction in 2012 is believable for many reasons. First, economic conditions are improving, albeit gradually at a national level. Locally, some parts of the country are doing quite well and are expected to see the creation of thousands of jobs in 2012. Likewise, housing conditions are improving in many areas, even in some markets that have been hard hit for the last seven years. Many markets are showing home-price stabilization and appreciation, declines in distressed inventory, and more normal demand starting to become evident in the resale market.
National, “macro” risks remain, including the threat of a European induced global economic recession, structural changes to housing finance, and the 2012 presidential election, and are driving depressing rhetoric about the future prospects for housing. But national risks aside, the recovery will be won one market at time, and our local market forecasts call for many markets to see growth in new-home construction and sales in 2012.