Growth Forecast for New Home Construction in Michigan

Single-family new home construction in Michigan is set to rise by just 3 percent in 2019 according to the Home Builders Association of Michigan (HBAM). HBAM’s econometric model estimates that 17,552 new single-family home permits will go out across Michigan in the coming year. The state’s most significant construction industry trade association also reported that 2019 production levels should reach 16,999 for new single-family homes by the end of the year, showing the highest levels since 2006.

“While it is encouraging to note that we are at the highest levels in 12 years, the low, single-digit percentage increases mean that Michigan’s critical housing industry is lagging behind general economic growth in our state,” noted HBA Michigan CEO Bob Filka. “The 17,000-plus units we expect to build next year is well behind our historical highs, and well behind the 26,000 to 28,000 units that economists say we should be building to meet long-term housing demand in Michigan.” 

The growth forecast of 3 percent reflects the national economists’ projections for a likely slowdown of North American vehicle production with an expected increase in oil prices, both critical factors in the HBAM econometric model. Though not explicitly part of the HBAM model, shortages in the number of available construction workers contribute to the likelihood that single-family home construction will be able to rise above the forecasted levels.

HBAM warned of a looming housing shortage in Michigan when in 2017 it issued a proposed 13-point action plan to aggressively attack challenges faced by the industry.  Copies of the HBAM report, “Housing Challenges Threaten Our Economic Growth—Where Will Ten Million Michiganders Live?” can be downloaded at HBAofMichigan.com.

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