Single-family starts will be on the upside for the duration of the year, even as the nation remains challenged by a lack of new housing units, said several experts during a panel sponsored by the National Association of Home Builders.
Roughly “80% of builders anticipate starting more homes this year, and more than half expect that starts will be up more than 10% compared to 2023,” remarked Ali Wolf, chief economist with the home building prop tech company Zonda.
In fact, according to a recent Zonda survey, nearly half of builders questioned said they are currently moving “full steam ahead” with building projects, while another 46% were also heading in the same direction, but cautiously so.
The new home construction push is in no small way connected to home sales, with a Zonda study showing that nearly 665,000 new homes were sold in January, an increase of 11.7% over January of last year.
“We need to build more than 1.1 million single-family homes a year to reduce the nation’s housing deficit,” remarked Robert Dietz, NAHB chief economist, in noting that the need for new housing remains historically pressing.
Dietz additionally observed that home builders are looking hopefully on the direction of interest rates, which are giving every indication of heading south in the months to come.
“By the end of this year, NAHB projects mortgage rates will be below 6.5% and by the end of 2025, we expect rates to be in the high 5%,” continued Dietz, who also noted that the downward rate decline is not only a good thing for builders, but also a positive response to housing demand and general housing affordability.
Altogether, the number of new single-family starts are expected to increase by around 4.7% before the end of the year, comprising some 988,000 new units. The numbers look even better for 2025, with an anticipated 1 million new single-family starts.
But, it was noted, even with the way forward looking promising for the home building industry, the simple cost of trying to build remains formidable, with building codes and zoning issues, among other factors, spurring an anticipated 24% increase in the asking price for a new home.
By Garry Boulard
