WASHINGTON, D.C. (February 6, 2012) — Home building reached its bottom in 2011, based on both the volumes of new homes sold and the volume of new homes closed, and is forecasted to show improvement in 2012, according to the Home Building Outlook, a new report from Hanley Wood Market Intelligence.
The Commerce Department reported in January that new home sales in 2011 totaled 302,000 single family units, which is the lowest annual number reported since the Census began reporting the series in 1963.
Despite that historic low, Hanley Wood reported several reasons why new construction is likely to see growth ahead. New and existing home sales volumes stabilized in the last months of 2011 on a seasonally adjusted basis and are expected to show incremental gains in 2012. The pace of new construction activity overall will be even higher due to strong trends in multifamily housing. As home ownership rates have declined in recent years, rental rates have risen and apartment vacancies have declined, which stimulates demand for multifamily units. Hanley Wood is expecting multifamily housing starts to expand 27% this year to a volume of 218,000 units.
The research firm expects single family housing starts to grow at a more humble pace of 9% as the ownership market deals with the lingering fallout of distressed property sales and depressed home values.
"It has been a long, difficult road for home builders and building product manufacturers, but we expect that 2012 should finally bring some reward for their diligence and perseverance," said Jonathan Smoke, the executive director of Hanley Wood Market Intelligence. "We expect a 14 percent increase in new home sales this year, off the historic lows of last year. While we recognize that national and global risks still prevail and not all markets are showing signs of housing market stabilization, the healthier local markets will lead the new construction recovery. Furthermore, as these local markets start to see new construction rebound, the positive impact on the local economy will begin a virtuous cycle of improving conditions."
The Home Building Outlook also covers forecasted new home sales and construction activity for 940 markets in the country and ranks the largest 100 markets that represent over two-thirds of new construction activity in the U.S. According to the new report, the number of markets expected to improve in 2012 far outnumber the number of markets expected to decline. 769 of 940 markets are expected to see growth in new homes sold in 2012 over 2011. The average forecasted increase in those improving markets is 17%.
"Even though we are not forecasting this to be a rapid recovery in new construction, the very fact that some markets will see growth will move those markets and the broader economy further along," Smoke said. "If our forecast holds true, the five top ranked home building markets will see an average growth of 26 percent in new home sales in 2012, or over 3,000 additional new home sales in just those five markets over 2011. At the average new home sales price in each of those markets, the incremental growth in sales amounts to total additional new home sales of over $1 billion."
The five top ranked home building markets for 2012 according to Hanley Wood Market Intelligence are Oklahoma City, OK; The Villages, FL; Washington-Arlington-Alexandria, DC-VA-MD-WV; Worcester, MA; and Portland-Vancouver-Beaverton, OR-WA.
About the Home Building Outlook
Published by Hanley Wood Market Intelligence, the Home Building Outlook provides tangible, quantitative insights into home building and new construction opportunities across 940 markets. In addition to providing Hanley Wood's distinct, informed local view of new home sales and starts, the report and accompanying data file also cover the market level performance on the following related key housing and economic metrics including median income; household growth; median home price; unemployment rate; existing home sales; permits; and, home ownership rate. www.HousingIntelligence.com/Home-Building-Outlook
About Hanley Wood Market Intelligence
Hanley Wood Market Intelligence is the housing industry's leading provider of rich data and analytical services on residential real estate development and new-home construction. Through their proprietary Housing Intelligence database, Hanley Wood Market Intelligence delivers housing insights into more than 800 MSAs and 2300+ counties. www.HousingIntelligence.com
Hanley Wood, LLC, is the premier media and information company serving the housing and commercial design and construction industries. Through its operating platforms, the company produces award-winning magazines and Web sites, marquee trade shows and events, market intelligence data and custom marketing solutions. The company also is North America's leading publisher of home plans.