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Thursday, August 09, 2007


housing starts forecast

from calculated risk

This approach would suggest there are between 750K (homeowner units only) and 1.35 million excess housing units in the U.S. Perhaps the excess rental units will keep pressure on other areas of Starts, and we should just focus on the excess homeowner units. To work off 750K units over two years - assuming sales stay steady (unlikely) - housing starts would have to fall to about 1.1 million units per year. This housing is "permanent site" and isn't transportable, so some regions may have a shortage of units and other areas may have more excess inventory - so as a reminder, this is just a rough estimate for the aggregate national market.

There are several significant assumptions in this approach, but my expectation is that starts will fall to around the 1.1 million units per year level; a substantial decline from the current level.

this comports well with the observations of some home builders, who are now suffering as they never have before. from a contrarian stance, misleading and falsely optimistic bottom calls remain periodic -- further bolstering the notion that things have much further to go.


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