A Few States Defying Downward Trend in Housing
A national slowdown in housing production is underway and is expected to grow as the year progresses, but a few states are going against the tide and will experience an increase in residential construction activity this year, according to NAHB’s State Housing Starts Forecast.
With their economies purring and their job growth healthy, Idaho, North Carolina, Washington and Wyoming are all projected in the NAHB forecast to show gains in their housing starts tallies this year.
On the opposite end of the spectrum, the job market is performing relatively poorly in Michigan and Ohio, the report finds, and the impact of last year’s Hurricane Katrina has left Louisiana with the loss of more than 200,000 jobs from its pre-recession peak.
The biggest neighbor to the several states battered by the 2005 hurricane season, Texas has benefited from a large influx of evacuees, which the forecast says will spur multifamily housing starts in the state this year and lead to an even bigger jump in home building activity in 2007.
While the massive effort needed to rebuild and repair Louisiana and Mississippi is expected to move forward fairly sluggishly this year, the pace is expected to pick up in 2007, according to economists at NAHB.
The economic outlook for both the South and the West is bright, forecasters say, and states in those regions will continue to build upon their industry sector strengths. California, however, is dogged by high housing prices and an overall high cost of living that will put a drag on the state’s generally positive outlook.
“We are coming off a very strong couple of years for the housing industry and markets are now starting to cool to more sustainable levels,” said David Seiders, chief economist of NAHB. “Each market has different factors that affect its local economy and housing market, but overall we are forecasting an orderly slowdown in housing starts.”
The nation this year will also start to see a major slowdown in home price appreciation, which rose by a lofty and atypical 13.2% in 2005. Among states most susceptible to a correction in prices are those on the East and West coasts, where prices surged the most during the recent housing boom. The downward trend in home price gains will persist in 2007, NAHB says.
Available to Executive Level subscribers to NAHB’s HousingEconomics.com ($995 for NAHB members and $1,195 for non-members), the NAHB Housing Starts Forecast provides in-depth data for each state, including forecasts for 2006 and 2007; data on key indicators such as employment, population, per capita income, median house prices and rental vacancy and homeownership rates; and rankings by growth in housing starts, starts per thousand of population, employment and population growth and the OFHEO House Price Index.