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Changing Market Mix

According to the Census Bureau, single family housing permits in New England fell 11% from 18,749 in 2013 to 16,708 in 2014, and Principia’s year end projections estimate an additional drop of 22% to 12,980 in 2015. In contrast, multifamily housing permits rose slightly to 12,193 in 2014, and are projected to have further increased by 35% in 2015 to 16,425 units based on strong numbers through Q3, particularly in Massachusetts. This surge in multifamily permits leads to a modest 2% growth up to 29,405 total permitted units for the region in 2015.

Permitted Units by State and Unit Type, 2013-2015

Expected Effects

Industry participants serving this area can benefit if they focus on the decline in single family rather than the moderate increase in total units. Single family homes tend to be larger in size and thus more building product intensive than multifamily units. The two unit types essentially flipped in relative importance in 2015, with single family falling from 58% to 44% of all permitted units. This is expected to decrease total demand for most building product categories despite the gain in total units. This effect is likely to be most impactful for products more heavily dependent upon new construction, such as lumber and drywall; it can also be expected to disproportionately affect those that see higher relative usage in single family houses, such as windows and doors.