Economic Panel Predicts Housing Will Gain Ground in 2018

The newly enacted tax law will create a more favorable tax climate for the business community, which should spur job and economic growth and keep single-family housing production on a gradual upward trajectory in 2018, according to economists who spoke at the International Builders’ Show in Orlando.

“We expect that tax reform will boost GDP growth to 2.6 percent in 2018, and this added economic activity will also bode well for housing, although there will be some transition effects in high-tax jurisdictions,” said NAHB Chief Economist Robert Dietz. “Ongoing job creation, expected wage increases and tight existing home inventory will also boost the housing market in the year ahead.”

However, builders will continue to deal with ongoing supply-side headwinds this year that will dampen more robust growth. These factors include an increasing number of unfilled construction jobs, a shortage of buildable lots and a slow growth in acquisition, development and construction loan activity that is failing to keep pace with rising demand.

In addition, regulatory costs stemming from building codes, land use, environmental and other rules have jumped 29 percent in the past five years, significantly impacting housing affordability. The ongoing U.S.-Canada softwood lumber trade dispute is further exacerbating the situation, as the price of softwood lumber has increased 20 percent from a year ago.

Click here for more on the NAHB’s economic forecast.