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Forisk Forecast: 2014 US Housing Starts Outlook

This is the first in a series related to Forisk’s 2014 forecast of softwood stumpage prices and hardwood log prices in the United States.

When Ben Bernanke stepped down in January 2014 after two terms as Chairman of the Federal Reserve, he said, “If the experience of the past few years teaches us anything, it is that we should be cautious in our forecasts.”  Amen.

Each six months, when updating our Forisk Forecast timber models, we review prior projections, and apply lessons learned from both our own work and findings from other forecasting researchers.  For example, the literature on combining forecasts informs Forisk’s approach to establishing baseline assumptions for macroeconomic factors.  Forisk’s Housing Starts Outlook combines publicly-available, independent forecasts from professionals in the housing industry.  As of February 2014, these include Fannie Mae, Freddie Mac, Mesirow Financial, the National Association of Home Builders (NAHB), The Conference Board, and Wells Fargo, as well as long-term assumptions from the Energy Information Administration’s (EIA) model of the US economy (Figure 1).

20140310 Forisk Forecast Housing

Our 2014 (February) Base Case peaks at 1.627 million housing starts in 2019.  For comparison, our February 2013 Base Case peaked at 1.749 million housing starts in 2018.  Overall, housing has slowed over the past twelve months, with projected totals for 2014 dropping 9% from 1.214 million to 1.103 million.  The decline split the difference between Forisk’s 2013 “Base Case” and “Slow Case” scenarios.

Of the individual housing forecasters tracked by Forisk, Mesirow Financial made the most substantive adjustments to its outlook, dropping projected starts by 18.9% (250K) for 2014 relative to expectations as of mid-2013.  Wells Fargo made the most modest adjustment, reducing projected housing starts by 3.5% (40K) relative to expectations as of mid-2013.

To learn more about the 2014 Forisk Forecast or Forisk’s market-specific forecasts of softwood and hardwood stumpage and delivered prices tailored to individual wood-using facilities or timberland ownerships in the US, contact Brooks Mendell at bmendell@forisk.com, 770.725.8447. 

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