‘Foong on Finance’ with Keat Foong: NAHB Changes Prediction Regarding New Construction

By Keat Foong, Executive Editor

The National Association of Home Builders (NAHB) has revised up its forecast for multifamily construction this year.

“The better-than-expected mid-year improvement in multifamily housing production has been significant enough for NAHB to increase its forecast for 2010,” states NAHB. The trade group projects that 120,000 units (two-plus units) will be started in 2010. At the International Builders’ Show in January, NAHB had predicted fewer than 100,000 units in starts for this year.

NAHB attributes the improved outlook to increased employment, pent-up household formation, and financial hurdles for buying homes.

Of course, 120,000 units still represents a low level of new construction. It is estimated that at least 300,000 units is needed in new multifamily construction annually just to keep up with the demand generated by population growth and obsolescence of existing stock.