Revived demand for new homes is fueling the recovery of the home building business. 2014 is set to be the best in 7 years.
According to the National Association of Home Builders, there is a low inventory of homes on the market. This means that new constructions are more than necessary.
Their forecast is that in 2014, there will be 30% more house starts. This would be a significant increase from the previous year. In 2013, there were 16% more starts than in 2012.
We, at JW Surety Bonds, believe the increase in new construction will also result in developers needing more subdivision bonds to guarantee public improvements.
Although the trend is showing growing demand and supply, the home building market is still halfway through its 2006 statistics. It’s likely that there will be a big increase at some point, which is the usual scenario after a recession. Most homes in the U.S. are expected to stay at affordable prices.
A key factor that will determine the speed of recovery in the building sector is the employment rate. If the job market keeps improving, the same will hold for construction and purchases of new homes.