Contractors beware! If you are at all like me, you have been anticipating that the new residential construction market is just a year or so away from rebounding to previous heights. Recently, two reports from respected economists make me feel that I was being overly optimistic. In fact, it appears that the rebound may be several years away.
The head economist of the National Association of Home Builders (NAHB) recently spoke here in St. Louis. He provided some very interesting documentation which shows trends over the last 40 years. He showed the mean number of units built throughout the period. When there was a period of, say 5 years, of starts over the mean, there was a similar period of time when starts were below the mean. Interestingly, this is very consistent over the entire period. Where this is important to understand now is the fact that there was essentially a 12–13 year period that the housing starts were above that mean line. The NAHB’s forecast is that it will likely take nearly as long of a period of starts below the mean before we return to normality. The implication is that if the downturn started in 2008, it might be the year 2020 before starts will achieve a level above the mean.