The U.S. economy is performing well, supported by healthy job growth, corporate tax reform and elevated consumer and business confidence.

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A Large Sub-Heading Robust Housing Demand Squeezed by Tight Supply and Worsening Affordability

Key Conclusions/Implications

• Strong U.S. economic growth during the first half provided additional support for shelter consumption as real GDP grew 2.7% year-to-date (“YTD”) through June, with 1.2mn jobs created and average wages up 2.6%.
• Year-to-date household formation activity continued at a robust pace with the U.S. adding +1.45mn new households relative to the same period in 2017. This was the largest increase in the level of housing demand during a two-quarter period since 2015. Further, the U.S. Census Bureau published positive revisions to its 2010-2017 estimates, adding ~700k incremental households to their growth estimates over the period.
• Housing starts for single-family and multifamily averaged 1.29mn YTD, at a seasonally adjusted annual rate, an increase of 7% relative to YTD 2017. This pace of construction should add ~1.0mn net new housing units during the year (after subtracting units lost to obsolescence), which remains well below demand.