Not all housing news yesterday was positive; Fannie Mae, Washington, D.C., cautioned yesterday in a commentary that projected slowdowns in labor force growth could weaken future housing activity.
Fannie Mae Director of Strategic Planning Patrick Simmons says while forecasts suggest a “healthy rebound” in new housing production later this decade as housing markets return to normal, an anticipated slowdown in workforce expansion suggests more modest prospects for new housing demand and construction than witnessed historically.
“We project that labor force growth will slow substantially in coming years,” Simmons says. He noted even using optimistic assumptions about future labor force participation rates (the proportion of the population in a given age and sex group that is either employed or actively looking for work), Fannie Mae expects workforce growth between 2012 and 2025 will be well below the historical average.
“The implications for housing are substantial,” Simmons says. “Given the positive correlation between housing production and labor force growth, the anticipated marked slowdown in workforce expansion implies weaker housing demand and homebuilding activity than observed in the past.”
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