Page 74 - Lighting Magazine December 2017

forECast 2018 | construction report
in 2016, helped by widespread growth across ma- jor metropolitan markets. That strength has begun to wane in 2017, given slight deterioration in mar- ket fundamentals (rent growth, occupancies) and a more cautious bank lending stance.
Commercial building will increase 2 percent, following a 3-percent gain in 2017, and continue
to decelerate a er the sharp 21-percent hike back in 2016. O ce construction should see further growth in 2018, helped by broad development e orts in downtown markets, and warehouse con- struction is supported by greater demand arising from e-commerce. However, store construction will remain weak, and hotel construction will con- tinue to pull back from its 2016 peak.
What Fred Said
Next year will be a lot like 2017 in key areas, according to FreddieMac.
Looking ahead to 2018, FreddieMac (other- wise known as the government-sponsored Federal Home Loan Mortgage Corp.) an-
nounced in late September that “the economic environment remains favorable for housing and mortgage markets. For several years, we have had moderate economic growth of about two percent a year, solid job gains, and low mortgage interest rates. We forecast those conditions to persist into next year.”
Modest increases in home sales and house price growth are expected to drive purchase volume higher next year, according to the third-quarter report. While FreddieMac claims, “Year-to-date total home sales are the highest since 2007,” it does point out that “existing home sales are
FORECASE SNAPSHOT (September 2017)
unlikely to increase much going forward. Limited inventory will remain a persistent problem, and longer term trends like the aging of the population and declining mobility across all age groups will keep a lid on existing home sales growth.”
FreddieMac predicts the growth in home sales will be primarily driven by new homes sales, par- ticularly single-family construction.
“We forecast total home sales (the sum of new and existing home sales) to increase about two percent from 2017 to 2018.”
Statistics compiled by the Economic & Housing Research Group reveal that “the mortgage mar- ket is shi ing away from a re nance-dominated market to a more purchase-oriented market. That trend will likely continue in 2018.”
Summary (annualized)
2016
2017
2018
30-year PMMS (%) House price growth (%)
3.7 4.0 4.4 6.4 6.3 4.9
Total home sales (M)
6.01
6.18
6.30
Total originations ($B)
2,125
1,800
1,695
72 enLIGHTenment magazine | december 2017
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