The slowing of the pace of improvement for housing at the end of 2013 was mirrored by changes in overall macroeconomic conditions. The Bureau of Economic Analysis second estimate of real GDP growth for the fourth quarter was revised down to a 2.4 percent seasonally adjusted annual rate, from 3.2 percent in the advance estimate and down from the 4.1 percent in the third quarter.
With respect to consumer confidence, February was a month of mixed results, as the Consumer Sentiment Index increased while the separate Consumer Confidence Index decreased slightly. After a slide in late 2013, both measures have shown resilience in the face of extreme weather and high utility bills.
At the start of the year, NAHB economists published a number of reports concerning the type of housing being built in 2014. For instance, single-family home size increased in 2013, with the impact due to a market tilted more to high-end buyers. Top features in new single-family homes include walk-in closets, low-E windows, laundry rooms and a great room.
The size of typical multifamily units also increased, albeit off of cycle lows set in 2012. Apartment sizes can be expected to increase in the years ahead as the for-sale multifamily sector recovers.
Quarterly data from the end of 2013 indicate that the market share of owner- and contractor-built homes was relatively flat as the overall single-family market expanded. The market share of townhomes was down over the course of 2013 as the first-time home buyer market sagged. However, the share of single-family built-for-rent construction appears to be declining off recent highs as investors pull back. This market remained a niche segment even during cycle highs, peaking just below 6 percent one year ago.
Finally, in policy news, the chairman of the House Ways and Means Committee recently published a comprehensive tax reform draft bill that would have significant impacts for home buyers and home owners, builders and multifamily developers and property owners. In general, the plan provides for lower tax rates, while trimming or eliminating many existing rules. NAHB will examine the bill in its entirety to help determine possible impacts on housing. While there is no expectation that the bill will move in the House in this election year, the draft will likely serve as a rough draft for future tax policy debates.
View this original post on the NAHB blog, Eye on Housing.
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