Those in the construction industry know that home building has a close relationship with the real estate market. When new home sales are down, tough times typically follow for contractors who depend on those jobs for business. Although recent housing data suggests that new home sales have fallen slightly in recent months, the National Association of Home Builders (NAHB) remains optimistic for a rebound in the near future.
The NAHB recently held a webinar with top housing economists to get their thoughts on where the real estate market is headed for the rest of the year and how construction companies may ultimately be affected.
Chris Varvares, senior managing director and co-founder of Macroeconomic Advisers, told the webinar that he expects 514,000 single-family housing starts for 2012. However, the prospects for 2013 and the long-term future look even better. Varvares says that increased demand for housing in the United States over the next decade could eventually lead to an explosion of growth in the construction industry, starting with 751,000 single-family homes built next year.
"Our long-term analysis suggests that given the demographics, we need to build roughly 1.6 million units a year over the next decade to meet demographic demand for housing," said Varvares. "Obviously, we are now well below that. We do believe we will see a fairly nice run in 2013 and beyond as we need to build those units."
NAHB chief economist David Crowe added that recent data showing slight dips in construction starts for March can be attributed to more housing projects being pushed forward to February due to the mild weather. However, home sales and construction are still up compared to the beginning of 2011, which is a good sign for the rest of the year.
Contractors who work on homes will likely see an uptick in projects through the rest of 2012, but they need to be prepared when they come along. The online auction site IronPlanet is a great way for construction company owners to acquire used construction equipment, often at a more affordable price than buying new.
