Home Building to Hit Highest Level Since 2007
Article by Ruth Mantell, Source: The Wall Street Journal – Market Watch
Despite a recent slump in residential construction, top economists expect housing starts in 2013 to hit 1 million structures, which would be the highest calendar-year level since 2007.
Looking even further ahead, analysts expect starts in 2014 to hit 1.28 million structures, according to the recently released Blue Chip Economic Indicators report.
“The consensus continues to believe the housing and automotive sectors will be bulwarks of the economy this year and next,” according to the report.
Pent-up demand and increasing household formation should support the housing market in coming years, economists say. However, that growth could be somewhat curbed by new federal mortgage rules that tighten lending standards, analysts say.
Despite difficulties in obtaining credit, the housing market is recovering. For 2012, housing starts reached about 780,000, up 28% from 2011, as buyers who could obtain credit took advantage of falling mortgages rates that hovered near record lows. Starts reached a bubble peak of 2.1 million in 2005.
Rising demand is supporting home-building companies, which saw shares skyrocket last year. The iShares Dow Jones U.S. Home Construction Index Fund ITB -.00% increased 78% over 2012, while the SPDR S&P Homebuilders ETF rose 56% XHB -0.23% .
