AECCafe: U.S. Housing Starts Forecasts and Long-term Graphs

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Alex Carrick, Chief Economist at ConstructConnect
Alex Carrick is Chief Economist for ConstructConnect. He is a frequent contributor to the Daily Commercial News and the Journal of Commerce. He has delivered presentations throughout North America on the Canadian, United States and world construction outlooks. A trusted and often-quoted source for … More »

U.S. Housing Starts Forecasts and Long-term Graphs

March 24th, 2016 by Alex Carrick, Chief Economist at ConstructConnect

Article source: CMDGroup

CMD’s latest U.S. housing starts forecasts appear in Table 1 of this Economy at a Glance and the patterns for ‘total’, ‘single-family’ and ‘multi-family’ are readily apparent from the three accompanying graphs.

Charts showing the long-term regional results for Northeast, Midwest, South and West can be found in the web version of this story (please provide link). All the graphs include a dotted trend line as provided by Excel.

Huge pent-up demand for U.S. new housing construction has been accumulating since 2007.

That’s ten years, or a decade, with residential groundbreakings in a crater that descended as steep as only about half a million units in 2009. (They pinnacled at 2.1 million in 2006.)

In 2016, total new home starts in America should reach 1.2 million units. By 2020, they’ll be approaching 1.7 million units.

Healthy ongoing improvements in labor markets, earnings that have been slowly but steadily rising and mortgage rates that remain at bargain levels historically will also support signings of purchase agreements − although in the short run, affordability and availability are still proving to be inhibiting factors to disappointing degrees.

The supply of entry-level homes available for purchase has been staying unusually low. And, according to the public statements of real estate authorities and trade associations, the price levels of better quality homes have been advancing perhaps too rapidly.

There has been more strength in the multi-family market so far in the recovery phase of residential construction, but that only suggests that single-family starts will have to increase their tempo in an attempt to catch up.

All four major geographic regions will show solid improvements in starts out to 2020. But declining long-term trend lines, 1960 to the present, in the Northeast and Midwest capture the effect of more mature or established markets.

The Midwest may have an opportunity to make unexpected starts advances, particularly if the repatriation of manufacturing jobs proceeds even better than expected. The Northeast is currently benefitting from a doubling of multi-unit starts in the city of New York last year.

The West’s long-term trend line has sloped only slightly downhill and the South’s is basically flat, although one can discern a slight upward shift upon close perusal.

The South and the West are where the population is increasing the fastest. The West’s advantage in attracting workers who will need housing lies in its high-tech hubs such as Seattle, San Francisco and Silicon Valley.

Table 1: U.S. Housing Starts Forecasts

	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020
Total U.S. (units millions)	0.587	0.609	0.781	0.925	1.003	1.111	1.243	1.367	1.470	1.562	1.654
(year vs previous year)	5.9%	3.7%	28.2%	18.5%	8.5%	10.8%	11.9%	9.9%	7.6%	6.2%	5.9%


Single-family (units 000s)	471.2	430.6	535.3	617.6	647.9	714.6	804.6	887.5	970.1	1039.9	1101.3
(yr/yr)	5.9%	-8.6%	24.3%	15.4%	4.9%	10.3%	12.6%	10.3%	9.3%	7.2%	5.9%

Multi-family (units 000s)	115.7	178.2	245.3	307.3	355.4	396.6	438.8	479.0	500.3	521.7	552.4
(yr/yr)	6.2%	54.0%	37.7%	25.3%	15.7%	11.6%	10.6%	9.2%	4.4%	4.3%	5.9%


Northeast (units 000s)	71.6	67.7	79.7	96.9	109.6	138.6	156.9	169.4	178.4	185.7	193.5
(yr/yr)	15.9%	-5.4%	17.7%	21.6%	13.1%	26.5%	13.2%	8.0%	5.3%	4.1%	4.2%

Midwest (units 000s)	97.9	100.9	127.9	149.6	162.5	152.3	171.8	188.5	205.8	222.7	238.9
(yr/yr)	0.8%	3.1%	26.8%	17.0%	8.6%	-6.3%	12.8%	9.7%	9.2%	8.2%	7.3%

South (units 000s)	297.5	307.7	397.9	463.6	496.2	554.6	620.6	691.6	746.3	792.2	839.3
(yr/yr)	6.9%	3.4%	29.3%	16.5%	7.0%	11.8%	11.9%	11.4%	7.9%	6.2%	5.9%

West (units 000s)	119.9	132.5	175.1	214.8	235.0	265.7	294.1	317.1	339.9	361.0	381.9
(yr/yr)	2.7%	10.5%	32.2%	22.7%	9.4%	13.1%	10.7%	7.8%	7.2%	6.2%	5.8%

Source of actuals: Census Bureau / Forecasts: CMD.
Table: CMD.

Grand Total U.S. Housing Starts

Grand Total U.S. Housing Starts