Just as the forecasting season is about to kick into gear, a consensus of sorts seems to already be emerging about where new-home construction is likely to land in 2013.
In its September forecast, Fannie Mae saw single- and multifamily home starts rising by 22.5% this year, to 746,000 units, and by 19% to 888,000 in 2013.
Today, the National Association for Business Economics unveiled its outlook for October that looks pretty similar to Fannie’s projections. Having polled 44 economists and forecasters, NABE’s consensus outlook is that housing starts will jump by 23% in 2012 to 750,000 units. The panelists were a bit more conservative about next year, when they see starts rising by 13% to 850,000.
However, at least five of the forecasters felt that housing starts could go as high as 1.07 million units in 2013.
Residential investment is expected to grow by 11.2% in each of the next two years. And using the Federal Housing Finance Agency’s index as its guide, the NABE panelists foresee home prices inching up by 1.5% in 2012, and by 2.8% in 2013. It’s worth noting, though, that the home price projection for next year is the median from a range of as low as 0.6% to a high of 5.6%.
Most of the panelists also believe that the Federal Reserve will stick to its guns and keep interest rates low through at least the end of next year.
However, anyone looking at this survey might think the panelists’ housing forecasts are counterintuitive, given that these forecasters also project the country’s gross domestic product to increase by only 1.9% this year and by 2.4% in 2013, which should benefit from a slightly stronger fourth-quarter surge.
The panelists also don’t think much of the recent decline in the unemployment rate, given their latest projection is that unemployment will remain at or above 8% until the third quarter of 2013, and even then barely drop below that percentage. Monthly job growth in 2013 is expected to average 155,000 non-farm payrolls, with the unemployment rate falling to 7.8% by the fourthquarter of 2013. “The quarterly forecast figures suggest a pattern of slow but steady increase in employment,” the report states.
The panelists’ projections reflect a somewhat mixed outlook about larger economic and global factors. More than three quarters of the respondents believe lawmakers will strike some kind of deal that will prevent the “fiscal cliff” of automatic spending cuts that are scheduled to go into effect starting in January. More than half of the forecasters expect the tax cuts initiated during the Bush Administration to remain in place for all income groups for at least another year. And nearly three fifths of the forecasters think the Social Security payroll tax will expire at the end of 2013.
John Caulfield is senior editor forBuilder magazine.
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