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Forisk Forecast: US Housing Starts Outlook, Q3 2018 Update

This is the first in a series related to Forisk’s Q3 2018 forest industry analysis and timber price forecasts for the United States.

Each quarter when updating our Forisk Research Quarterly (FRQ) forecast models, we revisit prior projections and review applied research on business and economic forecasting. Forisk’s Housing Starts Outlook combines independent forecasts from professionals in the housing industry. Currently, these include Fannie Mae, Freddie Mac, the National Association of Home Builders (NAHB), PNC, and Wells Fargo. Forisk applies long-term assumptions from the U.S. Energy Information Administration (EIA) and Harvard’s Joint Center for Housing Studies to establish the peak and trend over the next ten years (Figure).

Through the first half of 2018, U.S. housing starts increased 7.8% year-over-year; single-family starts increased 8.0%, while multifamily starts rose 7.3%. Despite a 4.1% year-over-year decrease in June actuals, the first decline of 2018, single-family starts were unchanged. The 453 thousand single-family units started in 2018 represented the most starts in the first half of a year since 2007.  By being more labor intensive and consuming more wood per unit of housing, single-family construction provides a greater impact on economic growth than multifamily. New single-family homes averaged 2,631 square feet in 2017, accounting for approximately 25% of total sawnwood and 40% of total structural panel consumption. In comparison, multifamily construction averaged 1,162 square feet in 2017 and represented 6% of total consumption of both the aforementioned products[1].

Overall, Forisk projects 2018 housing starts of 1.30 million, up 8.3% from 2017 actuals. Forisk’s 2018 Base Case peaks at 1.56 million housing starts in 2023 before returning to a long-term trend approaching 1.53 million. Our current forecast represents a 0.7% increase from our April 2018 forecast of 1.29 million starts.

To learn more about the Forisk Research Quarterly (FRQ), click here or call Forisk at 770.725.8447.


[1] Howard, James L.; McKeever, David B.; Liang, Shaobo. 2017. U.S. forest products annual market review and prospects, 2013–2017. Research Note, FPL–RN–0348. Madison, WI; U.S. Department of Agriculture, Forest Service, Forest Products Laboratory. 11 p.

U.S. Bureau of the Census and U.S. Department of Housing and Urban Development, 2017 Characteristics of New Housing, retrieved from U.S. Census; https://www.census.gov/construction/chars/pdf/c25ann2017.pdf, July 18, 2018.

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