PCA recently released forecasts for each of the major regions of the country, along with several sub-regions. A significant amount of detail was provided for each region, but several consistent trends emerged, as well as a few concerns:
- The U.S. is broadly in recovery, but some markets and regions are doing better than others, led by the Southeast, which is seeing robust growth forecast across all sectors.
- Residential is the best performing sector across all regions, with sharp increases in housing prices driving upticks in both permits and starts.
- Non-residential is under-performing in most regions, with the office, retail, and hospitality segments slow to shake the effects of 2020.
- One non-residential bright spot is the warehouse segment, which is showing strength nationwide, particularly in port cities.
- Infrastructure is largely stable, with PCA forecasting slow growth in all regions but the Mountain West, which is forecast to continue declining from its 2019 peak.
Things to Watch
- Housing affordability is emerging as a potential drag on residential demand, already driving shifts from single family to multi-family in many regions.
- Home equity cash-outs are up sharply, with the current value of outstanding home-equity loans at levels not seen since the 2004 – 2007 housing boom (though still far from 2006 peak levels).
- Recent increases in the price of housing had been widely viewed as more durable than those of the prior cycle, in part because they had not (until now) been fueled by debt.
- Although not yet at worrisome levels, this is a data point worth monitoring, as it has the potential to serve as a canary-in-the-coal mine indicator.
Read the complete PCA Regional Forecasts here