WASHINGTON, DC — The economy started slowing last fall, with the Midwest and Southeast hitting the brakes the hardest due to the slowdown in the production of automobiles and durable goods, said Steven G. Cochrane, senior economist and director of regional forecasting services, Economy.com.

Speaking at the recent National Association of Home Builder’s (NAHB’s) 62nd Semiannual Con-struction Forecast Conference at the Georgetown University Con-ference Center here, Cochrane stated that jobless claims are still focused in the Great Lakes and Southeast, but hours worked suggest an improvement in these regions. Weakness is now beginning to shift to the West, since the high-tech sector’s layoff announcements “have shown a huge surge in the West.”

This weakness will be felt in the West in the coming months, he said, particularly this summer and possibly into fall. The West currently leads the nation in job growth, but it is slowing rapidly. The Northeast economy, on the other hand, is holding up well.

Cochrane noted that a downturn in autos and durable goods is felt most strongly in the Midwest. A downturn in high tech is concentrated in the West and is felt somewhat in the Northeast. A downturn in the stock market is felt mostly in the Northeast and in California.

The greatest recession probability is on a local level, he related. Those cities with the highest probability are:

  • In the Northeast, Philadelphia, PA;
  • In the Midwest, Chicago, IL; Cincinnati, OH; Cleveland, OH; Detroit, MI; Milwaukee, WI; and Minneapolis, MN;

  • In the South, Greenville, NC; Raleigh, NC; Austin, TX; Little Rock, AR; and Oklahoma City, OK; and

  • In the West, Boise, ID, and Las Vegas, NV.

    Housing Market Varies

    Providing a regional housing outlook, Stanley Duobinis, assistant staff vice president, director of forecasting, NAHB, said that all local economies expanded last year but most saw slower growth in 2000. Local housing demand is a function of local household creation as well as special factors such as second home demand, stated Duobinis. Household creation depends on job creation. Some of the disparity in household growth rates among the states can be explained by factors such as the number of sunny days in an area as well as local infrastructure, attitudes toward growth, and tax policies.

    The 10 most rapidly expanding states, from 1999 to 2000, he said, are California, Nevada, Idaho, Colorado, Arizona, Hawaii, Texas, Florida, Virginia, and Maine. The 10 weakest states are Ohio, Indiana, Illinois, Iowa, Missouri, Kansas, North Dakota, West Virginia, Alabama, and Mississippi.

    The positive gains in single-family housing starts in 2000 came in some not-so-rapidly expanding states that are still rebounding and in some states that are consistently solid performers, he noted.

    Many rapidly expanding states have been building at very high levels for several years, and this means that the slide in 2000 still left them at solid levels.

    In 2001, the housing market is nearly flat with virtually no increase or decrease, but not all states are seeing this pattern, he said. States with the largest declines are in areas with a large manufacturing base. The largest gains are in states that grew little in the early 90s but that came on strong in the latter half of the decade. Nevada is an exception.

    The states that are the most building intensive are the ones with fundamentally sound econ-omies that have been expanding for a long time. The Mountain and southeastern states are the leaders by this measure.

    Over the last decade, the 10 most rapidly expanding states, said Duobinis, are Nevada, Idaho, Utah, Washington, Oregon, Arizona, Colorado, South Dakota, Georgia, and Florida.

    In summary, he stated that the U.S. housing market will see a decline in starts in 2001, but the changes in the states will vary. The country will see both growing housing markets and declining ones. The most active markets will continue to be in the Southeast and West.

    Sidebar: For Today’s Homes, Bigger Is Better

    WASHINGTON, DC — At the NAHB’s 62nd Semiannual Construction Forecast Conference here, Larry Zarker, vice president of marketing at the NAHB Research Center, provided a presentation on “Trends in New Home Technology and Construction.”

    The association does an Annual Builder Practices Survey (ABPS) to get input from home builders nationwide. The Research Center mails out a 21-page survey, covering an average of 2,000 respondents, representing about 45,000 homes built annually.

    The results show that “Houses are getting larger, more complex, and more expensive per square foot,” said Zarker. Builders are more likely to include appliances in the sale of the home. Also, opportunities for cost savings are being taken advantage of — if they offer greater value.

    The average number of square feet for single-family homes has increased from 2,060 to 2,230 from 1995 to 99. The cost per square foot rose from $84.60 to $96.40, land inclusive — a 14% increase in four years.

    Zarker pointed out that 25.7% of homes built in 2000 had structured wiring in three or more rooms. This kind of wiring is used for smart home installations.

    Commenting on the characteristics of the new home market, Michael Carliner, staff vice president for economics at the NAHB, noted that the median age of new home buyers has been increasing. The median home size also has been steadily increasing.

    Among the top-10 essential features to consumers, number two was an exhaust fan. And more people are working at home now and are therefore looking for a home office as a specialty room.

    Publication date: 06/11/2001