Posted July 16, 2018

NAHB: Single-family home production will continue to gain ground in 2019

NAHB chief economist predicts that home starts will near 1 million units next year.

Speaking before the National Association of Counties Annual Conference & Exposition in Nashville on July 15, NAHB Chief Economist Robert Dietz said that the housing recovery will continue to move forward but that builders continue to face persistent supply-side headwinds.

Single-family housing production is expected to post high single-digit percentage increases in 2018 and 2019, with starts nearing 1 million units by the end of 2019. While production continues to trend in the right direction, this is still far below normal production levels of about 1.3 million single-family starts per year.

On the multifamily side, NAHB is expecting multifamily starts to fall back in 2019 from 2018 levels to roughly 350,000 units. However, this does not indicate a weakness in this market segment. From 1995 through 2003, multifamily production averaged 331,000 units annually, which is considered a normal level of production.

Even as single-family production remains a gradual, upward trajectory, Dietz said that builders continue to grapple with a number of supply side issues, including shortages of skilled workers and buildable lots and rising construction costs.

NAHB also continues to work with Washington policymakers to reduce regulatory costs, which are hampering housing affordability. On average, nearly 25% of the cost of building a typical new single-family home – almost $85,000 – is attributable to government regulation. The average regulatory cost for multifamily production is even higher at more than 30%.