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U.S. Housing Starts Outlook, Q4 2020 Update: What a Long, Strange Trip It’s Been

This is the second in a series related to the Q4 2020 Forisk Research Quarterly (FRQ), which includes forest industry analysis and timber price forecasts for North America.

The U.S. housing market continued to trend higher in September while shifting to increased levels of single-family home construction. The seasonally adjusted annual rate (SAAR) of 1.415 million units represented a 1.9% increase from August. While multifamily housing starts remained volatile, declining over 16%, single-family starts increased for the fifth consecutive month, gaining 8.5%. The 1.108 million unit rate was the highest level of SAAR single-family starts since July of 2007. This trend looks to continue as permits increased 5.2% from the previous month with single-family permits rising 7.8%.

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, Grant Thornton, the National Association of Home Builders (NAHB), 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).

Forisk projects 2020 housing starts of 1.354 million, up 5.0% from 2019 actuals. Forisk’s 2020 Base Case peaks at 1.546 million housing starts before returning to a long-term trend approaching 1.50 million. Our current forecast represents a 14% increase from our July 2020 forecast and essentially brings us back to our first forecast of the year. We projected housing starts of 1.347 million in January of 2020. Robert Hunter wrote it best, “What a long, strange trip it’s been.”

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


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