<img height="1" width="1" src="https://www.facebook.com/tr?id=373327176680496&amp;ev=PageView&amp;noscript=1">

By: Alex Carrick on February 1st, 2017

Print/Save as PDF

U.S. Home Starts Forecasts in 7 Graphs

Economic News

This report summarizes U.S. homebuilding activity in seven graphs – labeled Grand Total, Single-family, Multi-family, Northeast, Midwest, South and West − that record ‘actual’ results for 1960 through 2016 and forecasts for 2017 to 2021.

2017-02-01-US-Housing-Starts-Graphic

The defining feature in all the charts is the deep trough that occurred in unit starts, as a result of the subprime mortgage meltdown, in 2009-2011.

For the past five years, homebuilding markets have been striving to regain equilibrium. Over the forecast period, there is still plenty of room for catching up.  

With respect to single-family versus multi-family starts, the former has the most lost ground to recover. Furthermore, there’s an expectation that today’s young adults (i.e., the millennial generation), as they form their families and begin raising children, will look to suburban living, much as their parents did in earlier era.   

Single-family starts (Graph 2) are expected to increase from just over 780,000 units in 2016 to nearly 1.1 million in 2021. The gain over the total five-year period will be +40%. Note that the Excel-generated long-term trend line for single-family starts is on an almost even plane.

Multi-family housing demand (Graph 3) has traditionally been strongest when the economy is weakest and jobs are scarce. During such times, the need for rental housing becomes more critical. But today, the jobless rate (4.7%) is relatively tight and employment prospects range from bright to glowing.

Multi-family starts began roaring back in 2011. In 2015, they exceeded their previous peak, although they still fell short of their levels achieved in the early 1970s and mid-1980s.

Multi-family starts are expected to continue climbing, but only gradually, out to 2021. They will experience a five-year increase of +15% as they move from 386,000 units last year to 445,000 units at the end of the forecast period.

The addition of the single-family and multi-family numbers yields total starts (Graph 1) that will step up from a little less than 1.2 million units in 2016 to a bit more than 1.5 million units in 2021, +32%.

The long-term trend lines for Northeast and Midwest housing starts (Graphs 4 and 5) slope emphatically downwards. Both regions recorded the same lackluster improvement in total number of jobs year-over-year in December 2016, +0.9%. (By comparison, the South was +1.6% and the West, +2.0%).

Much of the Northeast is densely populated and already built up. Its home starts outlook is somewhat restrained, shifting from 117,000 units in 2016 to 136,000 by 2021, +16%.

The Midwest includes many states that used to be manufacturing powerhouses. The new administration in Washington is already focusing on bringing jobs back to plants in Ohio, Michigan, Indiana and Illinois. Midwest new home groundbreakings will show a +27% change from 2016 (179,000 units) to 2021 (227,000 units).

Among the four major geographic regions, the South (Graph 6) is the only one with a long-term trend line that isn’t falling (although the West’s slope is only modestly declining). The sunny states of Texas and Florida are natural people magnets. Parts of Texas were pushed to the sidelines when the world price of oil collapsed, but crude is now on the comeback trail.

The South’s home starts are projected to increase +36% over the next five years, from a tad less than 600,000 units in 2016 to a smidge under 800,000 units in 2021.

Home starts in the West (Graph 7) will be almost as bullish as in the South, +34% from 2016 (286,000 units) to 2021 (382,000 units). The high-tech and venture capital sectors are providing the U.S. with a special winning edge relative to other economies around the world. Job opportunities will continue to percolate and burst forth along America’s Pacific coastline.

Graph 1: Grand Total U.S. Housing Starts

Grand Total U.S. Housing Starts

The last data point is 2021.

Data source: U.S. Census Bureau (Department of Commerce).
Chart: ConstructConnect.

Graph 2: Total Single-family U.S. Housing Starts

Total Single-family U.S. Housing Starts

The last data point is 2021.

Data source: U.S. Census Bureau (Department of Commerce).
Chart: ConstructConnect.

Graph 3: Total Multi-family U.S. Housing Starts

Total Multi-family U.S. Housing Starts

The last data point is 2021.

Data source: U.S. Census Bureau (Department of Commerce).
Chart: ConstructConnect.

Graph 4: Northeast Total Housing Starts

Northeast Total Housing Starts

The last data point is 2021.

Data source: U.S. Census Bureau (Department of Commerce).
Chart: ConstructConnect.

Graph 5: Midwest Total Housing Starts

Midwest Total Housing Starts

The last data point is 2021.

Data source: U.S. Census Bureau (Department of Commerce).
Chart: ConstructConnect.

Graph 6: South Total Housing Starts

South Total Housing Starts

The last data point is 2021.

Data source: U.S. Census Bureau (Department of Commerce).
Chart: ConstructConnect.

Graph 7: West Total Housing Starts

West Total Housing Starts

The last data point is 2021.

Data source: U.S. Census Bureau (Department of Commerce).
Chart: ConstructConnect.