Two economic reports came out this past Tuesday that paint a rosy picture for housing starts, albeit with some complications. If you’re a homebuilder, or in an supporting profession, the news bodes well for plenty of work into 2021.
The first, from Fredonia Focus Reports, predicts that starts will steadily climb to an annual pace of 1.6 million by 2021. Freedonia counts rising household income and an improving economy, along with a preference of many consumers for detached homes and other single-unit types, as contributing factors. The other report, from LegalShield, has a few dark linings, but overall predicts that the potential for starts will rise to a pace of 1.4 million by the end of this year.
The housing market continues to face significant headwinds, including higher prices for inputs (particularly lumber) and regional shortages of both skilled construction labor and land. However, the combination of existing home inventories near historic lows and nationwide housing prices now exceeding pre-recession levels should lead to increased housing activity. If the housing supply finally picks up to match current demand, construction investment should rise and housing starts may climb to an annual rate of 1.4 million or more by the end of the year.