Multifamily Angst? Home Builder Expectations Reach New Heights

WASHINGTON, DC-The National Association of Home Builders/Wells Fargo Housing Market Index reported that builder confidence in single-family homes posted a five point increase in November to reach 46 out of a scale of 100. It is the seventh consecutive monthly gain and 46 is the highest point reached on the index since 2006. The index, though, adds to the growing anecdotal store of evidence that growth in the red-hot multifamily will surely slacken if it hasn’t already. Probably such talk is accurate, says NAHB chief economist David Crowe—but it is hardly reason for despair. “I think we are moving to a place where both single-family homes and multifamily will grow at the same pace,” he tells GlobeSt.com.

The single-family home momentum captured in the index is not without bumps. For starters, the index has not breached the 50-mark benchmark, where an equal number of builders view sales conditions as good versus poor. Also, not all of the country’s regions are growing at the same pace, Crowe notes. The South posted a four-point gain to 43, while the Midwest and West each posted three-point gains, to 45 and 47, respectively, and the Northeast posted a two-point gain to 31. Superstorm Sandy, no doubt, played a role in that, but Crowe also notes there is higher unemployment in the Northeast and a slower pace of housing price recovery. “Starts and permits have not moved as quickly in the northeast as they have done elsewhere,” he says.