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January 13, 2025
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- January 13, 2025
with Michael Feuz
OUTLOOK FOR RESIDENTIAL CONSTRUCTION MARKETS
This week on TrendsTalk, ITR Economist Michael Feuz provides an in-depth analysis of both the single-unit and multi-unit housing markets and our outlook for 2025 and 2026. How important will labor retention be for construction in the coming years? Tune in to find out!


MEET YOUR HOST
Michael Feuz
Michael Feuz is a key member of ITR Economics’ team of expert economists and consultants. Backed by a decade of experience working for technology start-ups, he contributes to the production of client reports, forecast reviews, economic research, and regular client-facing communications.
“Join me on the TrendsTalk podcast to explore the world of economics. Episodes offer insightful discussion and expert interviews. We cover relevant economic concepts in an accessible way. Whether you are a curious layperson or an industry professional, TrendsTalk is your go-to source for thought-provoking analysis and a deeper understanding of the economic forces shaping our world.”
Key Episode Takeaways
- 0:48 – Single-Unit Housing Starts are currently in Phase C, Slowing Growth
- 1:39 – Stressing the importance of labor retention due to the anticipated slowdown
- 5:20 – Multi-Unit Housing Starts are currently in Phase D, Recession, but with positive signs ahead

The below transcript is a literal translation of the podcast audio that has been machine generated by Notta.
Hello, everyone. Welcome back to another episode of TrendsTalk. I am Michael Feuz, economist and speaker here at ITR Economics, filling in again for Taylor St. Germain, who’s getting a little bit more time with his growing family. Today, I want to talk about our outlook more for 2025, and we can talk a little bit about 2026 as well for residential construction, both looking at single-unit construction and the multi-unit construction, because both are in different phases of the business cycle right now, and we have a little bit different outlooks for both as we go through 2025.
So, let’s start with single-unit construction. Currently, single-unit starts are in a phase C up about 8% year-over-year on a 12/12 rate of change. That 12 month-moving-total is at about 1,011,000 starts currently. We do see it entering briefly in a phase D recession in the near term. However, that will be more so in the first half of this year. Overall, we see housing ending single unit starts ending 2025 at about 4.8% on a 12/12 basis, and on a 12 month-moving-total, that’s about 1,032,000 starts for our forecast.
So, what does that mean? Looking at 2025, we’re anticipating this period of near-term contraction. Big key for this side of the residential construction is focus on strategies for labor retention during maybe a slower part of the first half of this year. You don’t want to have to face a labor shortage and miss that upcoming growth that we’re expecting in overall in 2025, specifically in that second half, and really where we’re expecting general growth to persist through 2026 and beyond as well. So bear in mind, expecting a little bit of slowdown on that side. Now, a big reason to, while we are expecting that overall 4.8% growth, there’s still a lot of financial headwinds looming out there. So while our inventory is still low, well below where we were at the eve of the great recession, we still have what many consider persistently high interest rates.
And really, the ITR view is that, well, most of you the interest rates as maybe abnormally high or just persistently high, as I just said, they’re likely settling into the new normal. We’ve gotten the rate cuts from the federal funds rate, but mortgage rates don’t follow the federal funds rate. They follow that long-term treasury bond, which there’s a lot more that goes into it. So we do expect further easing in interest rates, but not coming down to anywhere near that level that we saw consistently between 2010 to 2022. So these financial headwinds, while they’ll remain, they will dampen the rise that we are expecting. There’s enough demand to anticipate steady growth over the next several years, but those headwinds will dampen that overall growth trend.
As I mentioned there earlier, just looking at the overall construction industry before we jump into the multi-unit as well, I do want to just talk about that management objective I left you with, focusing on the tight labor market and just the need to plan accordingly. We see labor costs rising by an increase of 28% by 2030. This is going to create a lot of intense pressure on overall profitability. So key is over these next couple years and really looking at 2025 as a key year is you want to reduce your dependency on labor growth. Look how you can automate processes on the construction energy, a construction sector that can be data capture, how can I capture data, data entry, communicate data across my organization more efficiently, investing in tools that predict inventory needs or invest in those tools that help you segment clients or projects that identify those high margin opportunities. Looking at the overall construction labor sector, there’s still 343,000 open jobs. So the labor market remains tight and the construction workers average hourly rate earnings is about almost slightly under $38 on an average that’s up 4.7 percent. That isn’t a phase C slowing growth but that’s still year over year upward pressure on overall wages so you need to budget that as a continuing rising costs and develop strategies to reduce your dependence on labor growth to make you remain more resilient in the years to come.
Now I just want to lightly touch on multi-unit housing starts. That 12 month-moving-total we have data through November was at about 353,000 units that’s still down 24.9 percent so that’s negative 24.9 year over year it’s in a phase D but we see that 12 month-moving-total nearing its trough and that near term rise will soon take hold and persist through at least 2027. Economic conditions are generally shifting in a direction that most developers will find appealing. And our outlook for this year in 2025 is for about 19.5% growth year over year in the multi-unit space.
So key for multi-unit housing is really to know your region as every region will vary and be prepared for that general rise to soon take hold and that increased demand and areas of opportunity. So to wrap up, we see both growth overall in single unit and multi-unit here in the residential construction space for 2025. So just use this early part of the year to prepare your business to be able to take on and capitalize on the increase in demand, especially as we move into the second half of the year.
So with that, again, I’m Michael Feuz, economist and speaker here at ITR Economics and I look forward to speaking to you again soon on TrendsTalk.