Before NAHB’s chief economist David Crowe could explain why he predicts home sales will improve by about 21% in 2011 at a press conference during the International Builders’ Show in Orlando, Fla., he had to explain that 2010 was actually a better housing market than 2009.

When 2010 numbers are in, he predicts that single-family home sales will be up 7% for the year. He admits that’s hard to believe considering sales faltered so drastically at the end of the year. Home sales for seven out of the first 11 months of 2010 were at historic lows, he said.

“So we are coming into '11 not having a very good feeling,” Crowe said. “So why am I convinced that there will be an improvement?”

In short, demand for durable products such as automobiles is up; and with households spending more, jobs will be created. More jobs means more people will be willing to buy houses again, unleashing pent-up demand.

“We didn’t form about two-million households,” he said.

Crowe is predicting that 475,000 new single-family homes were started in 2010 and he’s expecting that to grow to 575,000 in 2011 and to 860,000, or 50%, in 2012.

Freddie Mac Chief Economist Frank Nothaft’s predictions for 2011 were, for the most part, in line with Crowe’s, he said. The expected improvement of the jobs market should drive better demand for homes.

“200,000 job growth a month starts making a meaningful impact on the unemployment rate,” he said. “That’s enough to gradually bring up the employment rate.”

And that, he said, will help spark demand, which will be helped along by home price affordability and a still-low, though higher, mortgage interest rate.

He predicts home prices will bottom out in 2011, “maybe by the spring time with some improvement thereafter.”

But neither Nothaft nor Crowe expects markets to improve evenly across the country. The first green shoots are likely to come from the middle of the country rather than from the Sunbelt markets of California, Nevada, and Florida, where the markets famously overheated during the housing boom. Don’t look for much improvement in the rustbelt cities such as Detroit either, they said.

Rather, they expect improvement in Texas and in America’s heartland states, such as North Dakota, wherever there was little housing bubble and there is “corn and oil,” Nothaft said.

While a 20-plus percent improvement in the home markets might sound huge, both economists stressed the improvement comes from such a low number of housing starts that builders might not notice much difference.

Nothaft used the example of a builder who used to build 100 homes a year. In a market that is down 80% from 2005, he would have built 20 homes last year. A 20% increase would only mean he would build 22 in 2011.

“You are not going to feel like you felt five years ago,” he said.

And the year is likely to bring more challenges to smaller builders who are still having a tough time getting construction financing, Crowe said, adding that could give the large publicly held builders, with access to plentiful cash reserves and credit, a decided advantage.

“If we don’t get good credit back to the small builder, I think we will see the largest builders take share,” Crowe said.

Teresa Burney is a senior editor for BUILDER magazine.

Learn more about markets featured in this article: Orlando, FL.