Residential housing starts will be on the increase in 2015, according to the Portland Cement Association (PCA).
During the 2015 International Builders' Show, PCA Chief Economist and Group Vice-President Edward J. Sullivan announced that housing starts will increase 20 percent to 1.2 million units in 2015. This is up from roughly 950,000 units in 2014, and strong gains are also expected for 2016.
Sullivan stated that multifamily units in particular should see a significant increase in starts compared to previous years with a 12 percent jump from 2014 levels. Nearly 400,000 multifamily starts are expected in 2015 in addition to 800,000 new units in the single-family market. The trend in multifamily construction is expected to persist throughout the forecast horizon as high student debt keeps the Millenniums out of the new home market and Baby Boomers leave the market.
“The forecast is based on sustained strength in the labor markets with more than 3 million net new jobs created in both 2015 and 2016,” said Sullivan. “In addition, wage gains in the context of sub-6 percent unemployment are expected to reinforce labor market fundamentals.”
Sustained strength in job creation, coupled with a gradual shift in the mix of jobs toward higher skill and more significant wage pressures suggest added strength to consumer spending. Debt to household income now lies at an 18 year low. Consumer balance sheets have endured a healing period, and with improvement in the labor markets will be more able to spend than they have been in quite some time.