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Housing imbalances point to a slowdown ahead

Housing starts have been running at close to 190,000 units over the past year, well above demographic demand, which we estimate is somewhere in the range of 175,000 to 185,000 units. Meanwhile, newly completed unoccupied inventories remain high (see Chart), despite the bigger incentives currently being offered by developers. Accordingly, we expect that housing starts will eventually trend lower.

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