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Chapter 10
HOUSING AND
CONSTRUCTION
Lead author: Delton Alderman
117
Chapter 10 Housing and construction
Highlights
House prices increased by an average of 5% in advanced economies in 2017 and by 4% in emerging markets.
Between the fourth quarter of 2017 and the rst quarter of 2018, house prices rose by 4.5% in the euro area and
by 4.7% in the EU28.
The median price for new single-family units in the US was $323,100 in 2017, an increase of 5.0% over 2016
($307,800). The mean price was $384,900, up by 6.7% ($360,900).
The Euroconstruct region’s new-residential-construction subsector grew by more than 10% in 2017, the biggest
increase of all the construction subsectors.
Between April 2017 and April 2018, construction spending increased by 1.8% in the euro area (+2.1% in civil
engineering and building construction, +1.8%) and 0.9% in the EU28 (1.6% in civil engineering and +0.7% in
building construction).
A total of 78.6 million m
2
of new residential space was put in place in the Russian Federation in 2017, about the
same as in 2016.
The goal of the “Housing for Russian Family Programme” is to build 500,000 two-room apartments, beginning in
2018, and to put in place 120 million m
2
of residential space per year, by 2024.
All construction sectors of the US housing market improved in 2017. Beginner or starter housing remains weak,
however, and the quantity of dwellings being built is insucient to match population growth.
The number of US household formations increased in 2017 but remains less than the historical average.
In Canada, federal, provincial and local governments introduced regulations in 2017 designed to dampen rising
house prices and valuations, including a nationwide mortgage stress test, a foreign buyer’s tax, and rent controls.
The Canadian housing market is projected to be stable, even with the implemented regulations, new directives
to be employed, and the potential of interest rate increases.
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10.1 Introduction
In many countries, the new construction and remodelling
housing markets are the largest value-added markets for
wood products, and housing is a primary indicator and
catalyst of economic activity for overall economies. Thus,
economic projections and house-price analysis may provide
insights into house construction and remodelling markets.
Szemere (2018) reported that global real residential property
prices increased by 2% between end-2016 and end-2017
and were 7% higher in 2017 than before the global financial
crisis. House prices in advanced economies increased by an
average of 5% in nominal terms in 2017 and by 3% in real
terms. Canadian house prices increased modestly compared
with those in the US and the euro area. House prices in
emerging market economies increased by an average of
4% in nominal terms in 2017 and by 1% in real terms; BIS
(2018) noted that prices decreased noticeably in the Russian
Federation. Brondino (2018) reported that house prices rose
by 4.5% in the euro area and by 4.7% in the EU28 from the
fourth quarter of 2017 to the first quarter of 2018. US existing-
house prices increased by an average of 2.9% in 2017 (Federal
Reserve Bank of St. Louis, 2018a) and overall US housing
prices grew by 5.8% (Mortgage Bankers Association, 2018).
The World Bank (2018a) reported that global growth has
eased but remains robust. The growth rate of global GDP was
projected at 3.1% in 2018, easing to 2.9% by 2020.
GDP is projected to grow by 2.2% in 2018, 2.0% in 2019 and
1.7% in 2020 for advanced economies; by 2.1% in 2018,
1.7% in 2019 and 1.5% in 2020 in the euro area; and by 2.7%
in 2018, 2.5% in 2019 and 2.0% in 2020 in the US (World
Bank, 2018a). Canada’s GDP growth is estimated at 2.1% in
2018 and 2.2% in 2019 (IMF, 2018; OECD, 2018). The Russian
Federation’s economic recovery continues, but growth
prospects are modest (World Bank, 2018b). The World Bank
projects that Russian GDP will grow by 1.5-1.8% in 2018-2020,
with consumer demand expected to be the primary driver;
the country’s poverty rate is forecast to decline slightly. These
projections are based on increasing oil prices in the near
term and macroeconomic stabilization, which would support
economic growth.
10.2 European construction market
10.2.1 Review and outlook
The residential construction sector serves an estimated
474 million persons and 207 million households in the
Euroconstruct region.
14
The housing stock is about 235 million
units, of which nearly 8% are second homes and 6% are
vacant (Euroconstruct, 2017, 2018). An estimated 1.6 million
units were completed in 2017, yielding an average of 3.4 new
dwellings per 1,000 people (Euroconstruct, 2018). The low
number of dwellings started and completed affects the
construction sector and many others.
According to the 2017 “State of Housing in the EU” report,
housing has become the greatest expense for many
Europeans. As in the US, under-building results in constrained
inventories and higher prices for new and existing houses.
Migration, building regulations, labour shortages and the
decreased availability of building lots are additional factors
affecting house prices (Housing Europe, 2017). The global
trend towards urbanization may also affect future European
housing construction. Napoletano et al. (2018) reported that
more than half the global population now lives in cities – and
75% of Europeans live in urban centres, up substantially from
about 60% in the 1960s.
It may take time for stronger construction growth to occur
in Europe. The numbers of building permits and starts have
trended downward in recent years, and the outlook for
new residential starts is for a decline in the longer term. This
contrasts with new housing completions, the number of
which is forecast to rise. France, Germany, the UK, Sweden
and Spain (in descending order, by share) were estimated
to account for 59% of all residential completions in 2017
(Euroconstruct, 2018). Möbert (2018) estimated a 1-million
unit deficit in existing housing in Germany, the second-largest
housing market in the euro area (as measured by permits and
completions) after France.
In addition to lacklustre forecasts, the type of structures
built has changed recently, with more flats than 1+2 family
14 The Euroconstruct region comprises 19 countries. The western
subregion consists of Austria, Belgium, Denmark, Finland, France,
Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Spain,
Sweden, Switzerland and the UK. The eastern subregion comprises
the Czech Republic, Hungary, Poland and Slovakia.
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Chapter 10 Housing and construction
dwellings
15
completed. In Germany, for example, Dorffmeister
(2017) projected the quantity of 1+2 family dwellings built
to decline due to the aging of the population, declining
household size, substantial reductions in state subsidies, and
rapid increases in land prices and construction costs.
House construction and sales markets are greatly influenced
by government policies in several euro-area countries. In
France, for example, 60% of sales in 2016 were associated
with public programmes. France has also implemented
new directives to spur affordable housing (with a target
of 80,000 flats for youth by 2023) and new construction
(Yacoubi, 2017). Similarly, the Nordic countries of Denmark,
Finland, Norway and Sweden all have programmes for
affordable housing and new construction, such as housing
allowances and favourable mortgage terms and stipulations
for certain groups (e.g. disabled people, students, and people
with inadequate resources). Such programmes may partly
explain the high completion rates for dwellings in Nordic
countries: the rate is 6.6 units per 1,000 people in Finland,
6.5 units in Norway and Sweden, and 3.8 units in Denmark,
compared with the aggregate rate for the Euroconstruct
region of 3.4 units per 1,000 people (Pajakkala, 2018).
The total value of the Euroconstruct region’s construction
industry was estimated at €1,521 billion in 2017. Even
though new housing construction remains historically tepid
in the Euroconstruct region, output increased by 3.9% in
2017. New residential construction grew by more than 10%
(averaging more than 9.7% across 2016 and 2017), leading all
construction subsectors in growth. Residential remodelling is
also a bright subsector, particularly in western and northern
Europe, due to the aging of the housing stock. Looking
forward, construction growth is projected in all Euroconstruct
countries in 2018 (Euroconstruct, 2018).
New residential construction accounted for 42.6% of
total new construction spending in 2017, non-residential
construction for 34.4% and civil engineering for the other
23%. Residential remodelling accounted for 55.8% of total
construction spending in 2017 (more than 25% of Europe’s
total construction market value), non-residential remodelling
for 31.9% and civil-engineering remodelling for 18.7%
(Euroconstruct, 2018). Grandovska (2018) reported that,
between April 2017 and April 2018, construction spending
increased by 1.8% in the euro area and by 0.9% in the EU28.
The gains in both areas were due to improvements in the
civil-engineering and building construction subsectors.
Total spending on civil engineering is forecast to increase by
4.4% in 2018, 4.5% in 2019 and 2.5% in 2020 and total non-
15 1+2 family dwellings are detached or semi-detached single or multi-
unit structures for families.
TABLE 10.2.1
Construction spending forecast, Euroconstruct region,
2018-2020 (€ billion)
Change (%)
2018e 2019f 2020f
2017-
2018
2018-
2019
2019-
2020
New residential
336.6 341.3 343.4 5.1 1.4 0.6
construction
Residential
remodelling
407.4 411.9 418.4 1.0 1.1 1.6
Non-residential
262.2 265.3 267.9 2.8 1.2 1.0
– new
Non-residential
235.1 238.5 241.9 1.5 1.5 1.4
– remodelling
Civil engineering
182.2 193.0
199.7
1.7 5.9 3.4
– new
Civil engineering
139.5 143.1 144.8 1.6 2.5 1.2
– remodelling
TOTAL 1,563 1,593 1,616 2.7 1.9 1.4
Notes: in 2017 prices; e = estimate; f = forecast.
Source: Euroconstruct, 2018.
residential expenditure by 1.6% in 2018, 1.3% in 2019 and
1.2% in 2020 (Euroconstruct, 2018).
10.2.2 Residential construction and remodelling
The total residential construction market (new construction
plus renovation) increased by 5.3% in 2017. New residential
construction – a vital sector in the euro area – is projected to
increase from €336.6 billion in 2018 to €343.4 billion in 2020
(table 10.2.1). Aggregate residential construction volume in
2017 was driven by new housing construction, which had
a 10% share of expenditure. New residential construction is
forecast to increase by 5.1% in 2018, 1.4% in 2019 and 0.6% in
2020 (table 10.2.1) (Euroconstruct, 2018).
Residential remodelling is forecast to remain the principal
construction activity in the euro area, increasing from
€407.4 billion in 2018 to €418.4 billion in 2020. Government
programmes have historically supported home renovation
projects (Euroconstruct, 2018).
An estimated 1.8 million new-housing permits were issued
in the Euroconstruct region in 2017. In several countries, the
number of building permits issued is a leading economic
indicator because it is forward-looking: it is used for gauging
future housing supply and economic activity. Table 10.2.2
shows estimates and projections for issued building permits
for the top five countries in 2017-2020; graph 10.2.1 shows
trends in total permits, starts and completions over the
period 2002-2020 (Euroconstruct, 2018).
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TABLE 10.2.2
Top ve Euroconstruct region countries for total
housing permits, 2017-2020
2017e 2018f 2019f 2020f
THOUSAND HOUSING PERMITS
France 497.7 458.0 405.0 433.0
Germany 300.7 290.0 275.0 270.0
Poland 250.2 225.0 220.0 215.0
Italy 85.4 87.8 89.1 90.5
Sweden 76.5 76.2 67.1 62.9
Notes: e = estimate; f = forecast. Data for the UK are unavailable.
Source: Euroconstruct, 2018.
New housing starts were estimated at 1.4 million units in
the Euroconstruct region in 2017, comprising 796,000 flats
and 601,000 1+2 family dwellings. Data on starts are used
for assessing housing demand and forecasting future
construction employment, consumer-based product
demand and potential recessions. Table 10.2.3 shows the top
five countries in the Euroconstruct region for housing starts
in 2017; graph 10.2.1 shows trends in starts in 2002-2020
(Euroconstruct, 2018).
GRAPH 10.2.1
Building permits, housing starts and completions,
Euroconstruct region, 2002-2020
Notes: FD = family dwellings; * =estimate; **= forecast.
Source: Euroconstruct, 2004, 2018.
TABLE 10.2.3
Top ve Euroconstruct region countries for total
housing starts, 2017-2020
2017e 2018f 2019f 2020f
THOUSAND HOUSING STARTS
France 427.7 396.0 356.0 371.0
Poland 206.0 230.0 220.0 210.0
UK 191.0 198.0 208.0 210.0
Italy 85.6 87.6 89.0 90.4
Spain 80.8 90.0 100.0 105.0
Notes: e = estimate; f = forecast. Data for Germany are unavailable.
Source: Euroconstruct, 2018.
TABLE 10.2.4
Top ve Euroconstruct region countries for total
housing completions, 2017-2020
2017e 2018f 2019f 2020f
THOUSAND HOUSING COMPLETIONS
France 363 419 388
Germany 260 375 280
UK 187 794 199
Poland 179 200 210
Italy 81 83 86
Notes: e = estimate; f = forecast.
Source: Euroconstruct, 2018.
Total completions were estimated at 1.6 million units in 2017,
comprising 869,000 flats and 716,000 1+2 family dwellings.
Completion data indicate the quantity of houses finished and
available for use, sale or rent; as with starts, they can be used
in estimating sales for consumer-based products. Table 10.2.4
shows estimates and projections for housing completions in
the top five Euroconstruct countries in 2017-2020; graph 10.2.1
shows completion trends for 2002-2020 (Euroconstruct, 2018).
Table 10.2.5 presents estimates and projections for new
construction and remodelling valuations for the top five
countries in 2017-2020. Germany is top-ranked in both new
construction and remodelling (Euroconstruct, 2018).
10.2.3 Top ve new-housing-permit countries
in focus
Below we present insights into the top five permit-issuing
countries – including France and Germany, the traditional
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Chapter 10 Housing and construction
TABLE 10.2.5
Top ve Euroconstruct region countries for new
construction and remodelling expenditures, 2017-2020
(€ billion)
2017e 2018e 2019f 2020f
NEW CONSTRUCTION
Germany 64.1 67.0 68.3 67.3
France 45.5 47.2 45.5 43.8
Italy 51.9 53.7 55.3 56.7
Spain 30.7 33.2 35.5 37.3
UK 21.1 21.3 21.1 20.9
REMODELLING
Germany 121.7 121.0 120.4 120.4
Italy 68.5 69.5 70.2 71.0
France 62.0 62.5 63.4 64.6
UK 40.0 40.5 40.9 42.0
Spain 17.8 18.1 18.6 19.1
Notes: 2017 prices; e = estimate; f = forecast.
Source: Euroconstruct, 2018.
leaders in new construction and remodelling in the
Euroconstruct region.
France. According to the European Commission’s European
Construction Sector Observatory (ECSC) (ECSC, 2018a), 2017
was a record year for residential construction; nevertheless,
housing demand surpassed supply. Spending in the French
construction subsector was €36.8 billion in 2017 (23.7% of
total spending in real estate). Real estate’s overall contribution
to GDP was 11.5% (€243.8 billion), comprising residential
investment (the construction of new single-family and
multifamily houses; residential remodelling; the production
of manufactured homes; and brokers’ fees); housing services
spending (rent; owner’s equivalent rent; and utilities); and
expenditure on furnishings and durable goods. The outlook
for France is positive, with low interest rates expected to
increase housing demand.
Germany. Housing demand is strong, with an estimated
350,000 new units needed per year to the end of 2020.
Spending in Germany’s construction subsector was €69.6
billion (29.8% of total spending in real estate) in 2016, and
real estate’s overall contribution to GDP was 9.8% (€278.6
billion). The residential segment is expected to provide the
impetus for Germany’s construction industry, projected to
increase by 3.5% in 2018. In sum, the outlook for the German
construction sector is robust due to strong demand and low
interest rates (ECSC, 2018b).
Poland. ECSC (2018c) reported that Poland’s residential sector
is improving as a result of low interest rates and increasing
incomes. Housing is also influenced by “Apartments for the
Young” and “Family 500+”, two programmes designed to
spur demand. Spending in Poland’s construction subsector
was €5.1 billion in 2016 (21.6% of total spending in real
estate), and real estate’s overall contribution to GDP was
4.7% (€19.2 billion). The outlook for Poland is positive, with
low interest rates, rising incomes, and subsidy programmes
expected to increase housing demand.
Italy. The number of households in Italy has increased steadily
since 2010, and an increasing proportion of the population
lives in urban and peri-urban areas. House building has
declined incrementally since 2010, however, with only
46,000 building permits issued in 2016 (down by 54% since
2010). The housing market has been rebounding since 2014,
due in part to declining house prices and the enforcement
of a favourable housing tax code; despite this, the new-
residential-construction subsector is the only construction
segment forecast to continue a negative investment trend.
Spending in Italy’s construction sector was €17.8 billion in
2016 (19.8% of total spending in real estate), and real estate’s
overall contribution to GDP was 12.5% (€196.1 billion). There
is general uncertainty about the future of Italy’s construction
sector (ECSC, 2018d).
Sweden. A lack of housing supply, combined with high
demand, has resulted in surging house prices in Sweden
(ECSC, 2018e). Thus, the National Board of Housing projects
that 600,000 new homes will be needed between 2017 and
2025. The government has introduced an infrastructure bill for
2018-2029 in an effort to increase infrastructure investment,
advance mobility and ease the housing shortfall. Spending in
Sweden’s construction sector was €18.9 billion in 2016 (31.7%
of total spending in real estate), and real estate’s overall
contribution to GDP was 7.7% (€31.2 billion). The outlook for
residential construction in Sweden is positive, with housing
projected to be a driver of the Swedish economy over the
next few years. Nevertheless, Euroconstruct (2018) reported
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100
80
Percentage
60
40
20
0
22.8
33.8
43.4
26.8
41.8
31.4
Western Europe Eastern Europe
Residential construction Non-residential construction
Civil engineering
that new financial regulations and a large influx of new
houses are dampening housing prices and sales.
GRAPH 10.2.3
New construction spending, by Euroconstruct
10.2.4 Non-residential buildings and civil
subregion and sector, 2017
engineering
Non-residential construction accounted for 31.9% of
aggregate construction value in the Euroconstruct region in
2017. Overall economic conditions and government funding
(e.g. buildings for education and health) influence demand.
New non-residential construction is predicted to increase by
1.5% in 2018, 1.2% in 2019 and 1.0% in 2020). It is forecast
to comprise the following components in 2020: commercial
building construction (20.5%); office buildings (16.7%);
industrial buildings (16.4%); miscellaneous construction
TABLE 10.2.6
Civil-engineering construction spending forecast,
Euroconstruct region, 2017-2020 (€ billion)
Source: Euroconstruct, 2018.
New civil-
engineering
construction
Civil-
engineering
renovation
Total civil
engineering
2017 173.1 135.1 308.2
2018e 182.2 139.5 321.8
(12.2%); educational buildings (11.3%); storage buildings
(8.4%); health buildings (7.9%); and agricultural buildings
(6.4%) (Euroconstruct, 2018).
The UK, Germany, France, Spain and Poland) were the five
2019f 193.0 143.1 336.1
2020f 199.7 144.8 344.5
Notes: 2017 prices; e = estimate; f = forecast.
Source: Euroconstruct, 2018.
GRAPH 10.2.2
European construction spending, 2012-2020
800
largest markets for non-residential construction in 2017
(Euroconstruct, 2018).
The Euroconstruct region’s volume of new civil-engineering
construction was less in 2017 than it was in 2007, losing nearly
one-third of its GDP value. Civil-engineering renovation was
unchanged over the same period. Civil-engineering projects
are affected by different factors in different countries.
Modest spending increases are forecast through 2020 (table
10.2.6; graph 10.2.2). Germany, France, Italy, the UK, and the
Netherlands were the five largest civil-engineering markets
in 2017 (Euroconstruct, 2018).
€ billion
600
400
200
0
Non-residential Residential renovation
Civil engineering Total New Non-Residential
Notes: 2017 prices; e = estimate; f = forecast.
10.2.5 Construction-sector shares and growth:
Contrasting western and eastern Europe
In the Euroconstruct’s western subregion, total residential
construction expenditure is projected to increase from €718.7
billion in 2018 to €734.4 billion in 2020. Total residential
construction spending in the Euroconstruct’s eastern
subregion is forecast to increase from €25.2 billion to €27.3
billion over the same period (Euroconstruct, 2018).
New residential leads expenditure in the construction sector
in the Euroconstruct’s western subregion (43.4% of total
construction spending), followed by new non-residential
(33.8%) and new civil engineering (22.8%). Expenditure in
Sources: Euroconstruct, 2018.
the eastern subregion is led by new non-residential (41.8%),
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Chapter 10 Housing and construction
followed by new residential (31.4%) and new civil engineering
(26.8%) (graph 10.2.3) (Euroconstruct, 2018).
10.3 CIS construction market, with a
focus on the Russian Federation
10.3.1 Housing construction in the Russian
Federation, 2016-2017
An estimated 252,100 residential buildings were put in place
in the Russian Federation in 2017, a decline of 3.2% from 2016
(Rosstat, 2018); it amounted to an increase of 78.6 million m
2
of residential space, roughly the same as in 2016. An
estimated 269,300 buildings (including non-residential)
were put in place in 2017, down by 2.9% from 2016. In total,
131.1 million m
2
of floor space was installed in 2017, a 2.0%
decrease, year-on-year.
About 1.13 million houses were commissioned in the Russian
Federation in 2017, up by 2.4% over 2016. It was the country’s
fourth-highest number on record for commissioned houses
(Rosstat, 2018).
Although the Russian housing market is improving, house prices
fell in 2017 (Global Property Guide, 2018), possibly partly due
to the robustly expanding construction market. Lasek (2018)
Kazakhstan is also experiencing solid growth in construction
with total spending on buildings rising by 6.8% between
January and May of 2016 (to over $2 billion). The residential
construction component of this has risen by 9.9% during the
same period, which is particularly impressive given that the
average floor area has increased by 20% (WorldBuild365, 2018c).
10.4 North American construction
market
The US housing market has been improving since its low-
point in 2009, and the Canadian market has been steady
(graph 10.4.1).
Although the overall US housing market has improved,
new single-family house construction remains far below its
historical average. In Canada, the primary concern in housing
GRAPH 10.4.1
Housing starts, North America, 2011-2020
1.8
1.6
1.4
reported that house completions rose strongly in October
2017 (by 13.4%) and January 2018 (by 16.3%) (both month-
on-month). New housing regulations (scheduled to begin on
Million units
1.2
1
0.8
1 July 2018), which place stronger financial requirements on
construction companies, are thought to have provided the
impetus for the increase in housing completions (Lasek, 2018).
The goal of the “Housing for Russian Family Programme” is
to build 500,000 two-room apartments, beginning in 2018
(WorldBuild365, 2018a). Accordingly, the Russian government
plans to increase residential floor space by an additional
120.0 million m
2
per year to 2024 (Radio Free Europe, 2018).
This will be a substantial increase over the last four years, when
the average was about 80 million m
2
per year (Rosstat, 2018).
The Russian Federation’s Ministry of Construction and
Ministry of Industry and Trade – in conjunction with other
entities – were asked in July 2017 to develop programmes
for the building of wooden houses. The initiative includes the
construction of wooden buildings higher than three stories
(WorldBuild365, 2018b).
Construction output in the Ukraine increased by 17% in 2016
(after a cumulative decline of 42% between 2012 and 2015).
During the first quarter of 2017, construction output in the
Ukrainian non-residential sector increased by almost 21%,
residential construction by 17% and civil engineering also by
17%, compared to the same period the previous year (KHL,
2018).
0.6
0.4
0.2
0
Total US Canada
Notes: e = estimate; f = forecast.
Sources: US Census Bureau, 2018a; CMHC, 2018; Mortgage Bankers
Association, 2018.
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is overvaluation: prices are at historic highs, even after
adjusting for inflation.
10.4.1 The US housing market
The US housing construction market continued its moderate
growth in 2017. New housing starts remain below the 1959-
to-2007 average of 1.547 million total units and 1.102 million
single-family units. Total housing starts were estimated at a
seasonally adjusted annualized rate (SAAR) of 1.287 million in
April 2017, a 7.7% increase over April 2016 (graph 10.4.2) (US
Census Bureau, 2018a).
US sales of newly constructed single-family houses amounted
to 613,000 units (SAAR) in 2017 (US Census Bureau, 2018b).
This was well below the 1963-to-2007 average (697,000 units)
and similar to the average in 1963-1970, a period in which the
civilian non-institutional population averaged 129,349 million,
compared with 255,079 million in 2017 (Federal Reserve Bank
of St. Louis, 2018b). The number of single-family units being
built is insufficient for current population growth and there is
a shortage of “starter houses” (which typically cost $200,000
or less). New single-family sales and starts are crucial for
the wood products industry, with new single-family units
consuming more value-added products than any other
wood-consuming sector.
The median price for new single-family units in the US was
$323,100 in 2017, an increase of 5.0% over 2016 ($307,800).
The mean price was $384,900, up by 6.7% ($360,900).
The median size of completed new single-family houses
increased slightly in 2017, to 2,426 square feet (225.4 m
2
), up
GRAPH 10.4.2
US housing permits, starts and completions, 2011-2018
from 2,422 square feet (225.0 m
2
) in 2016. The mean size was
2,631 square feet (244.4 m
2
), down from 2,640 square feet
(245.3 m
2
) in 2016 (US Census Bureau, 2018b,c).
Sales of existing (i.e. previously owned) homes declined by
3.8% in 2017, to 5.510 million (down from 5.450 million in
2016). The median existing-house sales price in April 2018
was, $243,800 up by 5.7% over April 2017 (when it was
$ 230,700) (Mortgage Bankers Association, 2018).
Total private residential construction spending (i.e. single-
family + multifamily + remodelling) increased by 12.4% in the
US in 2017, to $525 billion. New single-family construction
spending increased by 11.4%, to $270.1 billion; multifamily
expenditure decreased by 1.9%, to $59.9 billion; and house
renovation spending increased by 19.1%, to $194.8 billion
(all SAAR; nominal US dollars) (graph 10.4.3). The Joint Center
for Housing (2018) estimated that $306 billion was spent
on remodelling in the US in 2017 and forecast this to rise to
$327.9 billion in 2018 and $341 billion in 2019.
Private non-residential spending increased by 1.3% in the US
in 2017, to $437.8 billion, and public expenditure decreased
by 3.2%, to $283.2 billion (US Census Bureau, 2018d) (graph
10.4.3).
Historically, US housing construction and sales have been a
major component of US GDP. Before the housing crash and
the global financial crisis, the contribution of housing to GDP
averaged 17-19%. It was 15.9% in 2017, compared with 18.6%
in 2005.
GRAPH 10.4.3
US construction spending, 2011-2018
500
400
300
100
0
Non-residential Residential*
Remodelling Public
Notes: *Private residential spending less remodelling expenditure
$ billion
200
Notes: e = estimate (January-April 2018 data); SAAR = seasonally
(seasonally annualized adjusted rate); nominal values; e = estimate
annualized adjusted rate.
(January-April 2018 data).
Sources: US Census Bureau, 2018a; Mortgage Bankers Association, 2018.
Source: US Census Bureau, 2018d.
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Chapter 10 Housing and construction
Residential investment peaked in 2005 at 6.5% of total GDP
and averaged 4.9% from 1963 to 2006. It was only 3.5% of
US GDP in the first quarter of 2018, however (US Bureau of
Economic Analysis, 2018a,b,c), an additional indication that
the new-housing-construction sector has further room to
expand (US Bureau of Economic Analysis, 2018).
10.4.2 US construction outlook
The US housing market is improving, with most housing
sectors progressing since 2009. According to housing
analysts, robust housing construction and sales markets are
impeded by deficient inventory of new and existing houses
for sale; a lack of available lots for new construction and, in
some locations, a lack of construction workers; regulatory
burdens; a lack of builder financing; student-loan debts
accrued from higher education; shifting attitudes towards
house ownership; underemployment; and stagnant-to-
declining median incomes. There remains a tendency for
millennials (adults born in 1982 or later) to live with their
parents. The number of household formations increased in
2017 but is still below the historical average.
The Mortgage Bankers Association (2018) projected new
single-family housing starts in the US at 0.92 million units
in 2018, 0.99 million units in 2019 and 1.03 million units in
2020. Projections for starts are 1.31 million units in 2018,
1.38 million units in 2019 and 1.41 million units in 2020. The
Mortgage Bankers Association (2018) forecast new single-
family sales of 0.65 million units in 2018, 0.67 million units in
2019 and 0.70 million units in 2020. Sales of existing houses
are projected at 5.56 million units in 2018, 5.77 million units in
2019 and 5.93 million units in 2020.
10.4.3 Canadian housing construction market
Amid considerable unease about Canada’s rapidly escalating
housing prices, federal, provincial and local governments
GRAPH 10.4.4
Housing starts, Canada, 2011-2018
Thousand units
250
200
150
100
50
0
Single-family Multifamily permits
Row Semi-detached
Note: f = forecast.
Sources: BMO, 2018: CMHC, 2018; Scotia Bank, 2018; TD Bank, 2018.
introduced regulations in 2017 to dampen rising prices and
valuations. These included a nationwide mortgage stress test;
a foreign buyer’s tax; and rent controls (Price Waterhouse
Coopers, 2018). By the first quarter of 2018, the effect of the
regulations had been a decline of 10% in the average sales
price for Canadian houses and a sharp drop in house sales
(Evans, 2018). House prices were down by 1.3%, year-on-year,
in June 2018 (CREA, 2018). Dolega and Sondhi (2018) forecast
that existing regulations, additional directives, and increasing
interest rates would hamper the housing market, which,
nevertheless, would remain “sturdy”.
Canadian new-housing starts were estimated at 219,763
units in 2017 and 191,528 in 2018 (CMHC, 2018). On average,
starts are projected at 201,000 units in 2019 and 205,000 units
in 2020 (BMO, 2018; Scotia Bank, 2018; Preston and DePratto,
2018). Of the starts in 2017, 76,843 were single-family; 28,046
were row-house units; 12,291 were semidetached units; and
102,583 were multifamily. Of the estimated starts in 2018,
61,378 are single-detached; 18,808 are row houses; 8,962 are
semidetached units; and 102,380 are multifamily units (graph
10.4.4) (CMHC, 2018). Estimated housing sales in 2017 were
510,489 units; projections are for sales of 459,900 units in
2018 and 474,800 units in 2019 (CREA, 2018).
Cléroux (2018) expected Canada’s GDP growth to slow to about
2% in 2019, with the provinces of Alberta, British Columbia,
Saskatchewan and Ontario the main economic drivers.
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Dorffmeister, L. 2017. Swansong for the construction of 1+2 family homes in Germany. Available at: www.euroconstruct.org/
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ECSC. 2018a. European Construction Sector Observatory (ECSC), June 2018 – France. Available at: https://ec.europa.eu/
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Evans, P. 2018. Sellers blame new mortgage rules as average Canadian house price falls 10% in past year. Available at: www.cbc.
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Chapter 10 Housing and construction
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2017-2018
Forest Products
Annual Market Review
UNECE/FAO Forest Products Annual Market Review, 2017-2018
ii
NOTE
The designations employed and the presentation of material in this publication do not imply the expression of any opinion
whatsoever on the part of the secretariat of the United Nations concerning the legal status of any country, territory, city or area,
or of its authorities, or concerning the delimitation of its frontiers or boundaries.
DISCLAIMER
The views expressed in this paper are those of the authors and do not necessarily reflect the views or carry the endorsement of
the United Nations.
ABSTRACT
The Forest Products Annual Market Review 2017-2018 provides a comprehensive analysis of markets in the UNECE region and
reports on the main market influences outside the UNECE region. It covers the range of products from the forest to the end-
user: from roundwood and primary processed products to value-added and housing. Statistics-based chapters analyse the
markets for wood raw materials, sawn softwood, sawn hardwood, wood-based panels, paper, paperboard and woodpulp. Other
chapters analyse policies and markets for wood energy. Underlying the analysis is a comprehensive collection of data. The Review
highlights the role of sustainable forest products in international markets. Policies concerning forests and forest products are
discussed, as well as the main drivers and trends. The Review also analyses the effects of the current economic situation on forest
products markets.
ECE/TIM/SP/46
UNITED NATIONS PUBLICATION
Sales No. E.18.II.E.27
ISBN 978-92-1-117174-7
eISBN 978-92-1-047350-7
ISSN 1020-2269
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