Despite a series of pandemic-related challenges, 2021 finished the year with strong gains for most housing and residential remodeling indicators, amid forecasts for additional growth – and continued challenges – in 2022. Among the key statistics and forecasts released in recent weeks by government agencies, research firms and industry-related trade associations were the following:
While late-year single-family housing starts declined due to ongoing supply-side challenges, they nevertheless managed to post double-digit gains in 2021, according to the National Association of Home Builders. Total 2021 housing starts climbed to 1.60 million units, a 15.6% gain over the 1.38-million-unit total of 2020, the Washington, DC-based NAHB reported. Single-family starts totaled 1.12 million units, up 13.4% from the previous year, while multifamily starts were up 22.1%. “The double-digit gain for single-family starts was a continuation of the rebound and expansion of home building that took place in the wake of COVID-19,” observed NAHB Chief Economist Robert Dietz. “However, as mortgage interest rates are rising and construction costs increase, affordability headwinds are steepening,” he added. The NAHB’s outlook for 2022 calls for “relatively flat conditions for single-family construction, with additional gains for multifamily and remodeling,” even in the face of labor shortages, supply chain disruptions and longer construction times.
Despite a sales decline in December, existing-home sales rose 8.5% in 2021, as demand for housing remained robust, the National Association of Realtors reported. “December (2021) saw sales retreat, but the pullback was more a sign of supply constraints than an indication of a weakened demand for housing,” said NAR Chief Economist Lawrence Yun, adding that sales for the entire year finished “strong,” reaching their highest annual level since 2006. Yun said, however, that he expects existing- home sales to slow slightly in the coming months due to mortgage rates that are forecast to average 3.7% by year-end. Supply-chain disruptions coupled with labor shortages have hindered bringing additional housing inventory to the market, forcing existing-home prices to continue to rise sharply in the face of near record-low supply levels, although Yun said he expects home prices to rise more moderately this year (3%-5%), and then at a similar rate in 2023, as more supply reaches the market.
Spending for home improvements and repairs is expected to expand at a stronger pace in 2022, but signs point to an easing of growth by year’s end, according to the Leading Indicator for Remodeling Activity (LIRA), released recently by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The quarterly remodeling index projects that double-digit gains in annual homeowner renovation and maintenance expenditures will top out in the third quarter of 2022, before beginning a deceleration toward “more sustainable” rates of growth. “Strong increases in home sales activity, household incomes and home equity levels are supporting a faster expansion of the home remodeling market over the coming year,” said Carlos Martín, project director of the Remodeling Futures Program. While annual owner improvement and repair spending could reach an annualized pace of $430 billion by the second half of 2022, several headwinds may temper growth, Joint Center analysts said.
Boosted by gains in both new construction and residential remodeling, domestic shipments of major home appliances posted solid gains in 2021, the Association of Home Appliance Manufacturers reported. According to the Washington, DC-based AHAM, major appliance shipments posted an annual increase of 10.3% from January through December of 2021, compared to the same 12-month period in 2020. Full-year shipments totaled 85.6 million units, compared to the 79.5 million units shipped in 2020, AHAM reported. Gains were posted in all key product categories, including food preservation (+6.9%), cooking (+6.6%), kitchen cleanup (+4.3%) and home laundry (+14.4%), the association said, noting that shipments were down in the fourth quarter compared to 2020, after exhibiting gains in the first three quarters of 2021. ▪