Yes, yes it will!
As homebuilder sentiment is strong and home prices remain elevated, single-family housing is predicted to rise this 2020. Thus, it’s good time to be a homebuilder.
According to the National Association of Home Builders (NAHB) Housing Market Index slipped a point to 75 in January. The NAHB said that low mortgage rates in a healthy labor market is increasing the need for additional inventory for single-family homes. It is also reported that the housing starts for December soared by 16.9% to a 13-year high. Single-family starts were up 11.2% to a seasonally adjusted rate of 1.055 million units, the highest since June 2007.
CNBC even reported that the iShares U.S. Home Construction ETF (ITB), which tracks the homebuilding stocks, surged last Friday (January 24) to highs not seen since 2006 following blockbuster data for U.S. housing starts, which jumped 16.9% to 13-year highs in December.
After a decade of sputtering and false starts, things are looking up for the entire homebuilding sector.
Experts now worry about the sustainability of the housing market.
There is currently a deep supply/demand imbalance with respect to the U.S. housing market. The latest National Association of Realtors Existing Home Sales report showed that inventory was 1.64 million units, which represents only a 3.7-month supply at the current annual sales rate of 5.35 million units per year.
One of the biggest reasons is post-asset bubble psychology. After asset bubbles (especially residential real estate bubbles) the losses affect almost all major stakeholders (buyers, sellers, lenders, and regulators) of the asset class in question. Buyers are reluctant to purchase real estate, worrying that it could go down in price. Homebuilders are worried about being stuck with homes they cannot sell, and lenders are reluctant to extend credit to the sector, especially when they are still licking their wounds from losses incurred earlier.
Another major issue for the builders has been a lack of skilled construction labor. Quite simply many of the electricians, plumbers, etc. who were employed during the housing bubble years changed industries as opportunities dried up during the bust. Many found new jobs in the energy sector, which was taking off just as housing was imploding.
Thus, the company that can find its way past these headwinds to take advantage of the high demand stands to benefit greatly according to Forbes Real Estate.
About the writer: Shaura Cuyan writes about all the hottest Real Estate trends and predictions for Summit VA Solutions! She has previously written for a number of freelancing gigs and writes her own blog on lifestyle and current issues. She is a Graduate of Bachelor of Arts in Communication, taking up her Masters in Development Communication.