Three leading economists, including two from the National Association of Home Builders agree that the sluggish residential construction industry is experiencing a moderate rebound and that 2016 could be housing’s “best year in a decade.” They say that while the recovery has been a slow process, single-family construction may surge as much as 14% and will likely outpace multi-family for the first time since the crash eight years ago.
Multi-family construction has been quite robust in recent years — due to rental demand driven by the recession and the sheer number of millennials — but it is expected to taper off. This market phenomenon also owes its origins to the millennials who are now aging and making the switch from renting to owning, while also getting encouragement from lower mortgage rates.
Despite positive predictions for the industry, the three major obstacles hindering new construction remain the “3-Ls” – labor, lot availability and lending constraints. Limited housing inventory also continues to pose a problem in the residential sector, with a housing supply that has gone from surplus to shortage.