June 9, 2025

Hi everyone, my name is Taylor St. Germain with ITR Economics and welcome to this edition of TrendsTalk. We at ITR, you’re a political and unbiased source of economic intelligence and today I wanted to discuss our forecast for the housing market.

We did make an adjustment to our forecasts for US Single-Unit Housing Starts and I wanted to talk through that here. When I say an adjustment to the forecast, that’s really how I look at this. It was a downgrade to the forecast, but before we all go panicking, it was a very, very mild adjustment.

We revised the forecast downward for 25, 26, and 27, but the revision was only a down 1.2% to 4% over the course of the next three years. It wasn’t a massive downgrade. It wasn’t something we need to overreact to, but it’s still something I wanted to bring to light to discuss here on TrendsTalk.

Again, the revision ranged between 1.2% and 4% down for the next three year ends. Our forecasts for 2025, and this is the Trends Report series. For those of you that have access to the Trends Report, you can go take a closer look, for 2025 suggest that single unit housing starts will finish 2025 down 2.2%. That’s a minus 2.2%. That’s a year over year growth rate. From a unit number, that would mean the units for the end of the year, or I should say the full month of the year, would come in at 991,000.

It is some negative growth rates that we’ll be contending with this year. The reason for the mild downgrade was we did see some upticks in vacancy rates and stock of existing homes. These things are still historic. very low, which is the reason it wasn’t a more serious downgrade, but a little bit of uptick gives us a little bit of pause here as we look at the near term.

We’re also dealing with higher input costs, labor costs, and still interest rates, which are impeding some of the affordability out there, especially as we sit here in the middle of 2025. The last thing I would add into that is given the economic uncertainty that we’re dealing with today, it’s not surprising that there might be some hesitation on the home building side of things.

So overall we did downgrade the forecast for the next three years, but 2025 is the only time where we expect these growth rates year-over-year to actually remain negative. Again, our expectation is minus 2.2 percent for the full year of 25 compared to 24. But then in 2026, we still have very robust growth. We’re expecting the single unit housing market to be up 8.2% in 2026 compared to 2025. That’s 1.072 million units expected in 2026. And then in 2027, we do have growth slowing down, but still remaining positive at a 2.9%, which would get us to 1.103 million units.

So despite the mild downgrade to the forecast, there’s still a lot of growth that we’re projecting out there. Yeah, 2025, we might still see a little bit of a sluggish year with some negative growth rates, but 26 and 27, there’s a lot of growth still coming our way. And anytime we’re above that 1 million unit number, like we expect to be in 26 and 27, it’s a lot of good news out there.

So I just wanted to calm any concerns. Yes, did we make a downgrade to the forecast? Yeah, we did, but it was very mild. And even though we’re negative year over year in 25, there’s a lot of growth still coming our way in 26 and 27 as far as we’re concerned.

So businesses, home builders, take advantage of the slower period this year to really make sure you’re prepared for all the growth that’s coming in 26 and 27. This is one of the few indicators or data series that we’ve had to downgrade as a result of some of the uncertainty that we’re dealing with here today. Still a lot of good news out there on the horizon, just a little bit of near term sluggishness before we’re back into that rising trend.

Keep your eye on the long-term, plan for long-term growth. That’s still the takeaway here as far as I’m concerned. Thanks so much for joining me on this edition of TrendsTalk. Please remember to like and subscribe to TrendsTalk wherever you listen to your podcasts. I’m looking forward to seeing you all in the next one. Take care for now.