Dual Market Dynamics: Boost in Single Family, Decline in Multifamily Construction Demand

Building Material Outlook: A Tale of Two Markets

In 2024, the forecast for building materials demand points to two contrasting outcomes. For companies focusing on single-family construction markets, it's anticipated to see a surge in activity and demand, while multifamily construction players may face a downturn.

These insights come from our Building Products Demand Metera proprietary measure of installed building product categories since 2000, partnered with Home Innovation Research Labsaccompanied by our exclusive forecasts offering unparalleled strategic planning intelligence for the industry.

The Best Scenario: A Boost in Single-Family Housing

This year, the single-family new construction market is expected to drive robust demand across various building material sectors. With factors such as rate buydowns, a stagnant resale market, and quick-move-in homes bolstering sales activity, it has led to an accelerated pace of single-family home starts. Our Home Builder Survey, representing 21 of US sales for new homes, reveals that January 2024 saw single-family starts per community increase by +36 year over year YY, surpassing seasonal norms. This replenishment push and steady market fundamentals are expected to fuel growth for production builders, particularly those capable of scaling up rapidly.

The Implications: A Surge in Building Material Demand

With this uptick in supply creation coupled with solid market fundamentals, the outlook is optimistic for single-family builders looking ahead to a period of growth from January through mid-year 2024. This increase will translate into consistent demand for building materials, starting with the products installed earlier in the construction process and expanding as homes progress towards completion.

The Worst Scenario: A Decline in Multifamily Demand

Multifamily new construction marks the of a boom period for building material manufacturers who benefited from high activity levels and exted build times. The deluge of completed units outpacing demand, alongside increased costs of capital, has forced developers to halt projects. We forecast that multifamily new construction starts will plummet in 2024.

The Implications: An Early Look at a Pullback

Our Building Products Dealer Survey offers an initial glimpse into the imping shift: dealers reporting strong multifamily demand declined by -40 percentage points YY for February's survey.

Building Material Companies Must Evaluate Exposure

For companies heavily concentrated in single-family construction, anticipate accelerating production to meet growing demand. Conversely, those with a substantial multifamily exposure should prepare for decreasing demand on building material products from mid-year onwards.

As the contrasting paths of these two markets unfold, we are here to help you optimize your risk and return. Our Building Products Demand Meter forecasts -market demand across 18 building product categories through collaborative partnership with Home Innovation Research Labs. If interested in discussing how our services can benefit your company, please don't hesitate to reach out.

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