Forecast: Multi-Family Demand Down, Single-Family on the Rise
Originally Published by: John Burns Research and Consulting — March 8, 2024
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Building material spending will grow in 2024. However, demand from new construction end markets will not be the same. For those exposed to single-family construction, a building material boom is coming. For those largely exposed to multifamily, expect a material bust.
These insights are from the Building Products Demand Meter, produced in partnership with Home Innovation Research Labs. The Demand Meter is a quarterly measure of building products installed across 18 categories back to 2000 and our proprietary forecasts, which equips clients with product-specific market intelligence for strategic planning unparalleled in the industry.
The best of times: single-family new construction
This year, strength in the single-family new-construction end market will drive stronger demand for building products. Rate buydowns, a frozen resale market, and quick-move-in homes boosted single-family new home sales in 2023. This created a push to replenish communities that were sold out faster than expected. Our Home Builder Survey, which represents 21% of US new home sales, indicates that single-family starts per community were up +36% year over year (YOY) in January 2024 and above seasonal norms. This increased supply (combined with solid market fundamentals) will prime production builders, especially large builders who can quickly scale up, for growth in 2024.
Implications for building products
Stronger single-family starts, which should continue through the first half of 2024, will drive steady demand for building products. The cadence of this demand is predictable and driven by build schedules. It will start with strong growth for products installed earlier in the build process, followed by growth for those products installed closer to the completion of a single-family home.
The worst of times: multifamily new construction
The end of the apartment construction boom means that multifamily building products demand will decline over the second half of 2024. From 2021 to 2023, multifamily new construction has been a strong end market for building products manufacturers, who have benefited from elevated construction levels and extended cycle times. Now, a deluge of completed units—which will outpace demand—and elevated costs of capital have forced developers to press pause. We expect multifamily new construction starts to plunge in 2024.
Implications for building products
Our Building Products Dealer Survey shows an early read of the shift away from multifamily: dealers rating multifamily demand as Strong dropped -40 percentage points YOY in the February survey.
Building products companies should expect increased demand during the first half of the year from projects with extended cycle times and units nearing completion. As this tapers off in the second half of 2024, multifamily demand for building products will pull back.
For building product companies, now is the time to evaluate your exposure to single-family and multifamily construction. For those largely concentrated in the single-family end market, plan to accelerate production to meet growing demand. If highly exposed to multifamily, plan for a decline in demand for your products over the second half of 2024.
As the tale of these two end markets unfolds, we can help you optimize your risk and return. Our Building Products Demand Meter forecasts end-market demand across 18 building product categories. We have partnered with Home Innovation Research Labs to provide our clients with these timely insights. Please reach out to discuss how we can help your company.