NAHB Predicts That Higher Interest Rates Will Cool Off Housing
Higher interest rates and energy costs will combine in 2006 to knock residential construction from this years record peak of 2.05 million starts, according to the National Association of Home Builders. Washington, D.C.-based NAHB predicts single-family housing starts will decline 6.6% next year, to 1.59 million, and then tumble another 3.6% in 2007. Multifamily housing starts will slip 0.5% in 2006, to 350,000, and hold at that level through 2007.
"The bump from rebuilding the Gulf Coast after Hurricane Katrina will not be huge," says Bernard Markstein, NAHBs director of forecasting. He expects the rebuilding effort to only add about 45,000 starts in both 2006 and 2007.