Housing Starts Not Keeping Up with Demand Furniture and Housing Indicators Industry Sales, Housing Starts, Household Formations
Although the U.S. now has a healthy economy, incomes are on the rise, and growth in household formations has finally started to normalize, the housing industry cannot keep up.
This is the first factoid in a series of five factoids detailing slow-to-grow housing starts, low inventories, and rising mortgages and rents.
The rebound of residential construction continues to be slow well past the recession and the affordability for middle-income households continues to narrow. Labor shortages and the rising cost of land and materials has led to housing being built primarily for the higher end of the market. At a time when Millennials are fully entering their home buying years, many are being locked out – not boding well for the furniture industry.
Fewer homes are being built per household than at any time in U.S. history. According to Joint Center for Housing Studies estimates, annual construction should now be on the order of 1.5 million units, or about 260,000 higher than in 2018.
This factoid shows the key economic indicators since 2011 when the recovery from the recession began in full swing. Through 2018, the furniture industry has shown consistent growth, but industry sales slowed in the first quarter of 2019 – only increasing by 1.8 percent from 2018 Q1 to 2019 Q1. Meanwhile housing starts through May of this year are showing negative growth, down 1 percent compared to last year. Household formations are increasing at a faster pace in recent years – 112,000 units higher than housing starts from 2017 to 2018.
Source: U.S. Census Bureau, U.S. Dept. of Housing and Urban Development; Current Population/Housing/Vacancy Survey