Housing starts in the U.S. is forecasted to reach 1.3 million units in 2018. Single-family starts are projected to account for roughly 70 per cent of the starts. Canadian housing starts in 2017 were near 220,000 and projected at 210,000 units in 2018.
The projections are part of the 2018 Structural Panel & Engineered Wood Yearbook, which includes an analysis of the U.S., Canadian and global economies, focusing on factors that impact demand for engineered wood products across several market segments.
Little has changed in terms of the supply-side constraints that have inhibited home builders and apartment developers from responding to the increased demand for new housing units. Unemployment in the construction industry is at an historic low and lot supply is tight. Adding to these concerns for the prospective level of residential construction is the policy decisions made in Washington, D.C. Tax cuts have been enacted and additional spending over previously budgeted amounts at the federal government level will push the federal government’s budget deficit toward or above $1 trillion in 2019 and 2020, and perhaps beyond. This is occurring at the same time that the Federal Reserve will be reducing its holding of U.S. Treasury securities and mortgage-backed securities. The possible collision in the credit markets heightens our concern about how high long-term interest rates could go and its impact on the ability of young householders to buy a home.
Despite these concerns, household growth in the U.S. has picked up and housing starts in 2017 of 1.2 million units were insufficient to keep up with demand for both owner and renter occupied units.