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Higher Than Expected Increases in Housing Starts Shows Market Strength

by Freedonia Industry Studies

April 23, 2021

As has been chronicled many times on this site, a somewhat unexpected result of the COVID-19 pandemic has been a surge in demand for new housing. Nor has demand for housing abated, even as an increasing number of the US population is vaccinated and cities and states lift or loosen the shutdown orders that made the densely populated urban cores much less enjoyable in which to live. Indeed, many Americans have decided that now is the time to buy a home of their own, even despite:

  • a shortage of existing homes for sale, which has driven up the price of homes on the market
  • record-high lumber prices, which can add between $10,000 and $25,000 to the cost of constructing a new home
  • supply chain difficulties that have caused shortages of a wide range of building materials and other items – such as appliances – needed to outfit a newly erected home

Thus, the recent news that housing starts for the month of March were higher than expected is unquestionably good for not only potential home buyers but the construction industry as a whole. Builders are continuing to work to boost output of new homes, knowing that units can be quickly sold once they are placed on the market.

For the construction industry, continuing growth in housing starts will mean that demand for building materials will remain high, particularly of such products as:

  • softwood lumber and engineered wood products, such as plywood and OSB
  • drywall
  • siding
  • roofing materials and such accessories as underlayment
  • cabinetry
  • plumbing fixtures and fittings
  • pipe
  • flooring materials

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Construction and Building Products and Consumer Goods areas. Freedonia also offers an expanding catalog of COVID-19 Economic Impact reports, which highlight how various industries are responding to the current crisis with a comparison to recent recessions. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

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