Home
Global Supplier Directory
APPLIANCE Engineer
Supplier Solutions
APPLIANCE Line
Whitepaper Library
Calendar of Events
Association Locator
Contents Pages
Market Research
Subscription Center


 
Daily News

Housing Market Seen 'Simmering Down' in 2006
Dec 23, 2005
 Printable format
 Email this Article
 Search

Following strong growth over the past 3 years, home sales and housing production will ease back next year to around 2004's historically healthy levels, according to economists participating in a teleconference hosted by the National Association of Home Builders (NAHB). Striking an overall positive tone, NAHB Chief Economist David Seiders and JP Morgan Chase Senior Economist James Glassman were largely in agreement in their forecasts for the coming year in terms of the outlook for housing and the overall economy. "We're looking for a good economy through 2006, with GDP growth remaining strong and with job creation running at roughly the same pace as in 2005--key positive factors in the housing outlook," said NAHB's Seiders.

Seiders' forecast envisions overall housing starts reaching 1.94 million units in 2006, which is down from an estimated 2.06 million units this year and close to 2004's 1.95 million units. Single-family starts will decline to 1.59 million next year from this year's 1.71 million units, while sales of new single-family homes will ease to about 1.19 million units from this year's record-breaking 1.27 million. Likewise, multifamily starts will slip to 350,000 in 2006 from about 354,000 in 2005.

"Multifamily is doing well, with the condo share of the market up to about 50 percent at this point," Seiders noted. "We think multifamily starts will be pretty stable, with condos losing some market share in the year ahead and the rental side regaining some ground." Meanwhile, manufactured or "HUD-code" homes can be expected to see a temporary surge, due in part to orders for affordable housing in areas hit by the 2005 hurricanes. "The remodeling sector in NAHB's forecast is also showing persistent positive growth during 2006, partly reflecting hurricane-related expenditures. There's also a huge amount of home equity available for owners to borrow against for home improvements across the country," said Seiders.

Seiders foresees only a bit more tightening of monetary policy by the Federal Reserve in the coming year, thanks to the expectation that inflationary pressures will be kept in check. The average rate on a 30-year, fixed mortgage, recently around 6.3 percent, should inch up gradually to about 6.75 percent by the third quarter of 2006 and average about 6.6 percent for the year as a whole.

The pace of home price appreciation will be cut about in half over the next year, from an estimated average of 10.7 percent for 2005 as a whole (according to the OFHEO house price index for home purchases) to 6.5 percent in 2006 and about 4.4 percent in 2007.
The rate of price appreciation may have peaked in the second quarter of this year, Seiders noted, observing that many builders are reporting increased buyer resistance to the higher costs of housing and are turning to buyer incentives such as upgraded options to help maintain sales volume.

"It's pretty obvious at this point that the real estate market is gradually shifting to more of a buyer's market," said Glassman. "This has been a case of real estate prices catching up to market fundamentals--not a 'bubble.'" With this in mind, "It's reasonable to assume that house-price appreciation will be slowing down to the single digits."

Overall, Glassman believes we’re just hitting the midpoint of an economic expansion, and "The next several years should present a good backdrop for growth with low inflation. It looks to me like a pretty good--if not 'boomy'--outlook for the housing sector," he concluded.

Back to Daily News

 

Daily News

...........................................................

Apr 16, 2014: Home Builder Confidence Steady in April

Apr 16, 2014: Little Swan Sees China Becoming a Front-Loader Washing Machine Market

Apr 16, 2014: Hisense Poised for Continued Growth in Africa

Apr 16, 2014: Sensor Hubs Seeing Big Gains

Apr 10, 2014: AGA Rangemaster Names Kathryn M. Ireland To Be North American Brand Ambassador

More Daily News>>

RSS Feeds
.........................................................
Appliance Industry
Market Research

...........................................................

March 2014: Market Research - 62nd Annual U.S. Appliance Industry Forecast
February 2014: Appliance Magazine Market Insight: December 2013
January 2014: Market Research - Appliance Historical Statistical Review: 1954-2012
January 2014: Appliance Magazine Market Insight: November 2013




 
Contact Us | About Us | Subscriptions | Advertising | Home
UBM Canon © 2014  

Please visit these other UBM Canon sites

UBM Canon Corporate | Design News | Test & Measurement World | Packaging Digest | EDN | Qmed | Pharmalive | Plastics Today | Powder Bulk Solids | Canon Trade Shows