Residential construction will rebound 33% next year and another 47% in 2012, following this year’s disappointing 8% gain, according to a forecast by the National Association of Home Builders. Washington, D.C. Despite the large percentage gains projected for the next two years, NAHB predicts single-family housing in 2012 still will be well below 2006’s peak year. NAHB predicts a similar scenario for multifamily housing, with that market making steady gains through the next few years but remaining below its peak levels (see charts).
The gradual strengthening of the housing market will be due in part to more favorable interest rates. NAHB estimates that fixed mortgage rates will average 4.65% this year, down from 5.04% in 2009 and 6.04% in 2008. It predicts mortgage rates will slip to 4.60% next year before bouncing back to 5.31% in 2012.