Home Builders Hope to Build More Homes in 2011

Published by nora | Filed under Buyer / Seller Tips, Market Trends, Miscellaneous, Real Estate

A large number of home builders stopped building when the housing sector collapsed from the weight of foreclosures. Some of them survived by doing renovation or repair work or by accepting subcontracting assignments. Last year, some home builders finally emerged from their hibernation and started buying home lots for future development, and this year, more of them are hopeful they can increase their housing construction projects.

For the year 2011, the National Association of Home Builders expects to increase the number of housing starts by 21 percent from last year’s annual rate of 475,000 to a total of 575,000 units. Although this projected figure represents an increase from last year, this year’s projection is still lower than housing starts before the downturn.

In January 2007, for instance, housing starts reached an annual rate of 1.41 million units, based on data from the Census Bureau. This 2007 rate was much higher than this year’s expected rate even if this represented a drop from December 2006.

In January 2006, the annualized rate of 2.28 million was the highest rate of housing starts since 1973. It also represented an increase over the year by four percent. If we compare the annualized rates between January 2006 and the projected rate in January 2011, the drop is so sharp as the percent of decrease is a staggering 74.78 percent.

Despite these sharp drops in housing starts over the past four years, home builders are holding up. As expected, the larger home builders with deep reserves have been able to fight losses or drops in revenues by buying lands and home lots at bargain prices. These would pay off many times over when the real estate sector recovers and are sold at great profits or developed with greater profit margins.

During the International Builders Show at the Orlando Convention Center in Florida this January, a relatively large number of home builders expressed a certain level of pessimism. Even the number of attendees at the show in 2011 dropped to only around 50,000.

Some home builders even have a lower housing start forecast for 2011 compared to that of the NAHB. The Portland Cement Association projected a modest increase of 3.4 percent over the year to 492,000 units.

All in all, however, home builders believe that significant job creation and foreclosure slowdown by 2012 will push up housing starts and home building.

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