Financial services company Jefferies says the current market is poised for a healthy and much-needed slowdown in the near future. Rising home prices, low inventory, rising mortgage rates, and pent-up demand are just some of the factors plaguing the market, but there are four factors that may change that. Jefferies says construction will shift, noting that a shortage now offers builders an opportunity, reports Business Insider. Additionally, more Millennials heading into homeownership age will push builders to ramp up production. There are 9% more Millennials aged between 25 and 34 than 35 to 44, signaling an upcoming wave of buyers and demand.
The bank's modeling suggests monthly housing starts will land between 1.7 million and 2 million through 2024, markedly higher than the February reading of 1.4 million.
(3) Home inflation set to cool
Expectations for stronger inflation contributed to soaring lumber prices over the past year. Costlier building materials were estimated to be adding $24,000 to the cost of every new home, further boosting prices amid the supply shortage.
That pressure will soon be alleviated as the economy reopens and commodity-price inflation moderates, the team said. Futures contracts suggest lumber prices will sink 26% through 2022, just as construction picks up to match robust demand, it added.
Advertisement
Related Stories
Building Materials
Latest PPI Report Shows Price Increase for Building Materials in April
Softwood lumber increased by more than 6% month-over-month, but ready-mix concrete fell for the first time in four months
Jobsite Safety
Go Beyond Traditional Enforcement Methods and Put Employees First to Really Build a Culture of Safety
Why focusing on relationship-building and employee engagement is more effective for promoting jobsite safety
Construction
Demand—and Competition—for Skilled Construction Workers Grows
Strongest need seen for construction superintendents, with other job titles for skilled trades also in high demand