Improvement observed during the last quarter of 2012, and again in the first three months of this year, may again be seen in the coming months. As mortgage records showing steady rates can cause growth in consumer confidence levels, increasing demand could see further appreciation in home prices and possibly an uptick in new-home construction.
During its Spring 2013 Construction Forecast Conference Webinar, National Association of Home Builders officials announced such growth could be seen, but some headwinds could persist. NAHB Chief Economist David Crowe said the list of improving residential sectors nationwide has increased, however, construction professionals could be facing a number of obstacles.
"The broadening housing expansion is evidenced by the NAHB/First American Improving Markets Index, which now lists 273 metros areas out of a universe of 361, or three-quarters of the metropolitan areas in the U.S.," said Crowe.
Crowe cited rising material costs, difficulties in obtaining credit, uncertainty regarding future housing financial regulations and overly confining mortgage lending rules as factors which could be possibly deterring builders from making substantial progress toward meeting the current demand for housing. As the nation continues its recovery from the Great Depression, NAHB projects 672,000 single-family housing starts will be recorded in 2013, moving up 23 percent from the 534,000 units seen last year. In addition, single-family production is estimated to increase an additional 28 percent next year, totaling 858,000 units.
Consumers may be feeling same apprehension as builders
After exhibiting considerable rises during the past two months, consumer sentiment may be affected by some of the same uncertainties that plague housing construction professionals. The latest Thomson Reuters/University of Michigan Surveys of Consumers showed a small decline from March's level of 78.6, to a current reading of 76.4. Though a decrease was noted, the amount is identical to that of April 2012, and may have been lowered due to the recent senseless acts of violence in Boston.
The organization explained that consumers may be less optimistic about the ability of the national economy to continue to expand without experiencing a renewed downturn sometime in the subsequent five years. Meanwhile, the strengths in consumer spending may now be credited to real gains in household wealth, including rising stock prices and public property records like home values, as well as reduced debts.
"We are seeing slightly softer growth but on the other hand household wealth looks pretty good," Gus Faucher, senior economist at PNC Financial Services Group in Pittsburgh, told Bloomberg News. "The economy is continuing to expand but we do have some drags."