Recession? Builders have high hopes for 2020

LAS VEGAS — Homebuilders are headed into 2020 in the best mood in years.

Low interest rates and a good economy are driving more buyers to their doors, and worries about a possible recession have subsided.

“What a great time to be in our industry,” said Sheryl Palmer, CEO of Arizona-based Taylor Morrison Homes, a major builder in North Texas. “Each year we think we only have another year or two because a recession is looming.

“I just don’t see that,” Palmer said. “We are going to have some bumps. But I think we have a long road ahead.”

Just finishing the housing industry’s best year since the Great Recession, builders have some reason to be more upbeat.

Almost 70,000 builders and housing sector professionals are gathered in Las Vegas this week for the industry’s annual confab. Attendance at the International Builders show is up from only about 42,000 people during the recession.

But the turnout is still below the more than 100,000 people who came to the gathering in 2005 before the housing market crash.

Nationwide home starts are forecast to grow only about 4% in 2020 but that’s double the rate of 2019’s increase.

Mark Boud, the chief economist for housing industry research firm Metrostudy Inc., is expecting a recession no sooner than 2022.

“It won’t be a housing-led recession,” he said. “The job losses won’t be nearly as severe.”

Boud said unlike in the last recession, when housing began the downturn oversupplied, there is a shortage this time.

The only excesses in inventory are at the top of the market, he said.

“That’s what we see in all price ranges over $500,000,” Boud said. “We are increasingly top-heavy as we go up in prices.

“In the lower price ranges, there are more sales closings than construction,” he said. “We actually have a level of pentup demand of over 6 million homes across the nation.”

Even if his predictions of a recession ahead prove true, Boud said don’t look for a big housing market correction.

“We are not really forecasting a huge drop in prices,” he said. “It will come down a little bit, but nowhere near the crash we experienced in 2008.”