November 2016 U.S. Housing Report

In November, aggregate monthly housing data were mixed. Overall permits declined month-over-month and year-over-year and single-family permits declined month-over-month. New single family house construction spending improved minimally on a month-over-month basis and year-over-year basis. The Jan. 13 Atlanta Fed GDPNow™ model projects aggregate residential investment spending increased at a 9.2 percent (seasonally adjusted annual rate); new residential investment spending was estimated at 9.5 percent; and improvements were projected 3.4 percent in 2016 (based on December 16 data). Regionally, data were mixed across all sectors.

“… Slowing population growth suggests that we will have a short-lived housing boom in which starts hit the 1.3–1.4 million level, followed by a period of contraction until starts reach the level of long-run demand. We estimate this to be about 1.0 million units in the medium term. Housing will likely contribute to GDP growth in 2017–18 — particularly if economic policy creates a boom — but subtract from GDP growth by 2019 as the pent-up demand dissipates. In the long run, the slowing population suggests that housing will not be a growth sector (although specific segments, such as housing for elderly residents, might well be very strong),” says Dr. Daniel Bachman, Senior Manager, and Dr. Rumki Majumdar, Manager and Economist, Deloitte.

Source: Virginia Tech

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