A Kansas City Federal Reserve Bank economist thinks single-family and multifamily construction is poised for an upswing beginning this year.
Longer term, he sees more growth potential in apartment construction than in single-family housing, as the nation’s population growth rate slows and aging baby boomers move out of their homes.
Jordan Rappaport, senior economist at the Kansas City Fed, shared his views in an article for the bank’s fourth quarter 2013 Economic Review publication.
In the article, Rappaport said that multifamily construction activity should pick up this year, with single-family starts making significant annual gains beginning in 2015, at 790,000 starts nationwide. By 2020, his research projects annual housing starts reaching 1.3 million annually, followed by a decline that by 2035 will reach 860,000 starts annually.
He projects that construction of apartment units will be 360,000 units this year, rising to about 570,000 units annually by 2019, and slowly declining to 410,000 units annually by 2035.
“The slowing of U.S. population growth will put significant downward pressure on both single-family and multifamily construction,” Rappaport said in the article. “The aging of the U.S. population will put further downward pressure on single-family construction but offsetting upward pressure on multifamily construction.”
Wess Galyon, president and CEO of the Wichita Area Builders Association, said on Friday he couldn’t comment specifically on Rappaport’s research.
He said his group’s expectation is for moderate growth in new home starts in the Wichita area for the next several years “but not even close to the level it was at” before 2008.
“I think we will get back to a new norm at some point,” Galyon said of post-recession activity in housing.
He said he doesn’t know how long the “uptrend” in area new home starts will last. But there will be pent-up demand, he said, in part from people who lost their homes during the recession but need time to repair their credit and incomes to qualify for mortgages.
“It will be modest, not dramatic (increases) here,” Galyon said.