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Ivy Zelman flags overbuilding risk as household growth slows

HousingWire reports Zelman expects household formation to average about 1.0 million a year in the second half of the decade, down from roughly 1.8 million earlier, and says planning around about 1.4 million starts could outpace demand.

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HousingWire reports that housing analyst Ivy Zelman warned builders about potential overbuilding if the industry continues planning for more household growth than the country can produce. She said household formation could average about 1.0 million new households a year in the second half of the decade, compared with roughly 1.8 million earlier in the decade.

At HousingWire’s 19th annual housing conference in Boston, Zelman said building around a pace of about 1.4 million housing starts per year could create oversupply in some markets. She argued that if construction continues at that level, the industry risks overbuilding because household growth will not be sufficient to support both demand and supply.

Zelman also pointed to demographic headwinds that could reduce future household formation. HousingWire reports she cited falling birth rates, rising deaths, slower immigration, and more young adults staying in their parents’ homes.

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