CBO discusses the outlook for housing starts over the next 30 years—that is, the number of new single-family and multifamily housing units on which construction will be started—and describes the methodology behind its projections.
Housing starts, or the commencement of construction of new single-family and multifamily housing units, are an important component of the Congressional Budget Office’s forecast of the U.S. economy. This report discusses the outlook for housing starts over the next 30 years. Population growth is the most important driver of that long-run outlook, but several other factors affect it as well.
CBO’s assessment of the outlook for housing starts includes the following projections:
After 2024, housing starts remain fairly strong through the end of the decade. A desire for more living space during and after the coronavirus pandemic created pent-up demand for housing, and a large number of new immigrants sustains household formation. In CBO’s projections, housing starts average 1.6 million per year over the next 10 years.
Housing starts slow considerably during the 2030s and 2040s as population growth wanes. The number of new households declines as the population ages and the number of deaths rises and as the number of new immigrants returns to a level more consistent with historical experience. Housing starts average 1.1 million per year from 2034 to 2043 and 0.8 million per year from 2044 to 2053 in CBO’s baseline projections.
Several factors could cause the number of housing starts to be larger or smaller than projected. For example, if the number of new immigrants differed from that in CBO’s projections, outcomes over the 30-year period could differ substantially. Over shorter periods, financial conditions are important sources of uncertainty.
This report also describes the methods that CBO uses to produce the outlook for housing starts and to examine different assumptions that could alter that outlook.
