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At IBS: The case for double-digit growth

Once again, Kohler made a splash with its signature big-box booth approach to product demonstration.
Lindsay Beagle of Cleveland Tubing showed off some of the new colors of the Flex-Drain flexible landscape pipe.
At the Leviton booth, the evr-green electric vehicle supply equipment charged a Toyota.
Perennial Wood from Eastman was introduced to the building trade during the show. The product is described as real wood, modified at the cellular level to withstand the elements.
Josh Peltz displayed the Rhino Gutter Guard's good, better and best product assortment.
Marvin Windows and Doors recreated a village to display its various products, including its Integrity brand.

Orlando, Fla. -- The official housing forecast from the National Association of Home Builders (NAHB) is similar to last year's forecast -- with pent-up demand and improving demographics pointing toward growth in the double-digit percentages.

The problem: Last year's forecast was -- to put it mildly -- overly optimistic. During the International Builders' Show here in Orlando, the NAHB's chief economist David Crowe explained what's different this year and why he thinks a 16% increase in single-family housing starts is likely.

"I'm not saying we're going to have a banner year; I'm saying we're going to have a better year," Crowe told a crowded conference room of builders and vendors.

Single-family starts are forecast to reach 499,000 in 2012, a 16% increase over the record low 429,000 in 2011. One year later, the NAHB forecasts 660,000 single-family starts.

The scenario for double-digit growth begins with improving macro-economic signals. Gross domestic product is improving. Employment gains show improving. Consumer confidence that languished at 46 in September grew to 64.8 in December, according to the Conference Board. In January, however, confidence dipped to 61.1.

Most dramatically in favor of growth is a relatively new metric in the NAHB's quiver: the NAHB/First American Improving Markets Index. In September 2011, the index showed 12 markets improving. The February metric shows 98 growth markets.

A year ago, the NAHB's 2012 forecast follows a 2011 forecast that called for 575,000 single-family starts, which was off by 146,000.

Like last year, the NAHB's forecast was generally endorsed by Frank Nothaft, chief economist for Freddie Mac.

"We're coming off a very low number," Crowe said, referring to 2011's single-family starts figure that was the lowest since the government began keeping track in 1959. "Things are going to get better, not grand. And some places are going to get better than others."

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