Near record-low mortgage rates and pent-up demand for rental units will keep residential construction a pillar of the expansion as concern grows that mandated cuts in planned federal spending will slow the world’s largest economy. A lack of inflation also means the Federal Reserve can keep pumping money into financial markets to help stem any slackening.
“There’s still a lot of room for improvement in housing, both for activity and for prices,” said Aneta Markowska, chief U.S. economist at Societe Generale in New York, who had the highest starts forecast in the Bloomberg survey. “This is critical for the U.S. economy.”