Economists' Outlook

Housing stats and analysis from NAR's research experts.

Latest Housing Starts (December 2014)

  • Single-family housing starts in December reached their highest monthly activity in nearly 7 years.  Still, the increase is coming off very depressed levels and another 50 percent jump is needed to help relieve a potential housing shortage.
  • Multi-family starts took a dip in December.  But this sector has been strong and can be said to be back close to normal.  A strong rise in rental demand and the need for apartments have been the main reason.
  • Numerically in December, single-family housing starts rose 7 percent to reach 728,000 (annualized rate) while multi-family starts fell 1 percent to hit 361,000 (annualized rate).  With the final month's data collected, for the year as a whole in 2014, the total housing starts reached 1.05 million.  That is woefully inadequate and well below historical normal.  Over the past 50 years, housing starts have averaged 1.5 million units a year.  This great underproduction is principally related to single-family units.  Multi-family production is back to normal.
  • Homebuilders are not having problems selling what they build.  The latest data suggests it only takes around 3 months to find a buyer for a newly built single-family house.  That’s fast.  Yet, the builders are evidently not in a hurry to build more.  Why?  Many of the small local builders simply cannot obtain construction loans.  In the past, they may have received a loan amount to build 20 homes.  But now, they are approved to build only 1 or 2 homes and only after this loan is repaid a new loan is then approved to build another 1 or 2 more.  Moreover, there are fewer construction workers around now after many went to Texas and North Dakota to work in oil drilling.  Now that the oil price has come down, there could be more construction workers for home building in 2015.
  • The forecast is for single-family housing starts to rise by 25 to 30 percent in 2015 as construction loans become more accessible.  Multi-family housing starts will rise by additional 15 percent given the very low apartment vacancy rates.  That translates into a good recovering year for homebuilders in 2015.
  • As an aside, Americans know that a home is a person’s castle.  Winds and elements may enter, but Kings and soldiers cannot.  Because of its long founding tradition these rights are taken for granted in America.  By contrast in China many rural local government officials arbitrarily demolish people’s home with neither homeowner’s approval nor proper compensation.  China in a few years will be the largest economy in the world, surpassing the U.S.  But China looks to face future social unrest because land ownership is not respected.

Housing Starts
Multi-family
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