Single-family new-home permits could fall 24% to 86% by 2035

“It is better to be vaguely right than exactly wrong.” — Carveth Read, Logic: Deductive and Inductive (1898) In April, I argued that housing demand is changing structurally, not cyclically. Recently, Steve Friedman and I presented at the HousingWire Homebuilder Summit, outlining the argument in slides and discussing its potential consequences. In summation: no major metro has above-replacement fertility, not even most of its family suburbs. Immigration, which carried most of our population growth for two decades, is close to zero. Deaths will exceed births by 2030. And nearly all the household growth left in the pipeline over the next decade – 85% of it – sits in the 75-and-over cohort, a group that, for very good reasons, buys almost no new detached homes. We put a lot of charts behind that argument, but we didn’t convert it into estimates of single-family permits, something I’ve been thinking a lot about since. Anyone could say housing production will drop, but how bad? It’s not a simple question. Household formation and single-family permits are related, but the relationship shifts with the share of new households that rent versus buy, the share of permits for second homes, the ...