BILL MCBRIDE: Housing Starts Are Going To Double

By admin on January 7, 2013

One of the most critical components of the economy is housing, and there’s nobody who has a better command of the housing economy than Bill McBride of Calculated Risk.

As such, his latest post on the outlook for residential investment in 2013 is a must-read.

Here’s the most eye-popping part of his assessment:

Housing starts are on pace to increase about 25% in 2012. And even after the sharp increase last year, the approximately 770 thousand housing starts in 2012 will still be the 4th lowest on an annual basis since the Census Bureau started tracking starts in 1959 (the three lowest years were 2009 through 2011).

Here is a table showing housing starts over the last few years. No one should expect an increase to 2005 levels, however demographics and household formation suggest starts will return to close to the 1.5 million per year average from 1959 through 2000. That means starts will come close to doubling over the next few years from the 2012 level.

As for his specific 2013 forecast, he says:

I expect growth for new home sales and housing starts in the 20% to 25% range in 2013 compared to 2012. That would still make 2013 the sixth weakest year on record for housing starts (behind 2008 through 2012), and the seventh or eight weakest for new home sales. So I expect further growth in 2014 too.

This is one of the most bullish things that can be said for the US economy. Housing is still so beat down, and has come along to slowly in terms of recovery, this represents a major tailwind for some time to come.

Read his full post here >

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