Robust Housing Demand Squeezed by Tight Supply and Worsening Affordability.
Housing starts for single-family rentals and multifamily averaged 1.29mn YTD, at a seasonally adjusted annual rate, an increase of 7% relative to YTD 2017. This pace of construction should add ~1.0mn net new housing units during the year (after subtracting units lost to obsolescence), which remains well below demand.
Strong U.S. economic growth during the first half provided additional support for shelter consumption as real GDP grew 2.7% year-to-date (“YTD”) through June, with 1.2mn jobs created and average wages up 2.6%.
Year-to-date household formation activity continued at a robust pace with the U.S. adding +1.45mn new households relative to the same period in 2017. This was the largest increase in the level of housing demand during a two-quarter period since 2015. Further, the U.S. Census Bureau published positive revisions to its 2010-2017 estimates, adding ~700k incremental households to their growth estimates over the period.