As we head into the last quarter of 2012, housing and new residential construction appear to be performing better and more consistently than the overall economy. Through the second quarter, home prices are registering gains year-over-year nationally and in most markets. Permits, starts, and new-home sales are also showing gains over 2011 and have generally picked up more momentum as the year progressed. The housing patient is finally recovering and has a pulse again.
The broader economic picture hasn’t been as good, as job growth has been inconsistent and beneath the level that would be required to improve the unemployment rate. But with housing finally contributing again, it’s clear that it is providing some much needed support to economic fundamentals as we look to initial projections for 2013.
Like most economists, we are expecting growth in housing in 2013. Our initial forecasts for 2013 call for greater than 20 percent growth in both starts and new-home sales. Unlike most other economists, however, we forecast on a market-by-market basis. Out of 940 markets with a population of 20,000 or more, we are expecting 513 of them to see growth in 2013. And the growth potential in those markets ranges from 2 percent to 50 percent.