New home construction is the main driver of ancillary uses of concrete.
I’VE BEEN PREDICTING this since the depths of the recession: When the power of the Millennials is finally unleashed, and they begin to form households, watch the impact they will have on housing, and particularly the new home market.
Millennials have been migrating out of their parents’ homes, occupying the groovy, urban apartments and condos sprouting up in gentrified downtowns all across America. But remember, Millennials keep getting older; this means they marry, and when they start having families, the lifestyle epitomized on the television series “Friends” is abandoned for the suburbs.
This is important to concrete producers across them country because new home construction is the main driver of ancillary uses of concrete, such as streets and roads and other related public infrastructure, as well as commercial construction of all types.
So it’s no surprise that for the first time in a decade, more new U.S. households in the first quarter chose to buy homes than to rent, suggesting a long-term decline in homeownership rates might be coming to an end. Some 854,000 new-owner households were formed during the first three months of the year, more than double the 365,000 new-renter households formed during the period.
At a total of 1.219 million new households in just the first quarter, this is a blistering rate considering that historically formations run at a 1.1 million pace. The is a stark contrast to the all-time low in 2010, when only 400,000 households formed as the economy hit bottom.
The homeownership rate peaked at just over 69% in the mid-2000s before falling to a 50-year low of 62.9% in the second quarter of 2016. It has hovered around 63.5% for the last couple of quarters, just below the long-term average of around 65%.
Pierre Villere is President and Managing Partner of Allen-Villere Partners. Contact Pierre Villere at email@example.com or telephone 985-727-4310.
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