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In the ever-evolving landscape of the US housing market, staying informed about current trends and future projections is crucial for wood products and construction industry professionals.
We sat down with Jennifer Coskren, the director of wood products and timber at Fastmarkets, to delve into the complexities of the US housing market and trends in housing construction, shed light on the latest statistics and explore what the future may hold for the US housing market as we approach 2025.
Questions covered include:
Watch the full video below, with charts included, or read a summary of the key points below.
Affordability is one of the key influential factors in the US housing market.
In 2024, US housing demand has declined primarily due to high mortgage rates and economic uncertainty, with existing home sales hitting their lowest since 2010 in August 2024.
While a slight increase in housing inventory offers more options for buyers, affordability remains a significant challenge as home prices continue to rise. The effects of the Federal Reserve’s rate cuts may only translate to improvements by mid-2025.
In contrast, new home sales have increased by 3% through August 2024 thanks to attractive rate buydown options from large builders. Moving forward, a balance between demand and affordability will hinge on housing supply, the ongoing affordability crisis and labor markets in the short term.
The housing market has consistently fallen short of demand, especially after the 2008 financial crisis when construction slowed significantly. The annual housing supply needed is approximately 1.5 million units, but only around one million units were delivered from 2008 to 2019.
We estimate a need to catch up on about two million housing units.
Local zoning laws, permitting processes and land use regulations have further restricted new housing developments, particularly affordable and multi-family units, worsening the supply-demand imbalance. This shortage is most acute in growing populations, leading to rising home prices and rental costs.
Without policy changes, regulatory reform and increased construction activity, this underbuilding trend is likely to persist.
New York has rebounded since the pandemic as a vibrant construction market in 2024. Building permits have increased by 45% in the first eight months, driven by a resurgence in apartment construction.
Meanwhile, markets like Phoenix and Dallas continue to grow while cities like Tampa and Orlando are experiencing declines.
Explore Fastmarkets’ Metropolitan Dashboard, a new feature in our Lumber and Structural Panel Commentaries that offers detailed metropolitan-level insights into wood product consumption. Whether you’re a retailer, wholesaler or mill operator, this tool can help you make informed decisions in a dynamic wood products landscape. Learn more.
Construction will ease about 5.5% this year, with the single-family component of our forecast still up 5% to just under one million units.
While the September rate cuts by the Federal Reserve may not immediately boost new home construction, future cuts are likely to encourage side lined buyers to enter the market.
We are expecting an improvement in construction in 2025. We anticipate a rebound in both single-family and multi-family starts, with a forecast of approximately 1.5 million units, of which 1.1 million of them are single-family. Both single-family and multi-family are forecast to be up around 11%.
Access US housing market data, insights and forecasts, including prices for key materials like lumber, hardwood, softwood and timber from Fastmarkets. Find out more.