Fannie Mae expects housing starts to rise by approximately 23 percent in 2013 to 950,000 units, about the same increase as in 2012. While still well below the peak of more than 2 million units in 2005, it will be more than 60 percent above the record low in 2010.
Fannie Mae's projections of headship rates-the rates that population in various age cohorts will form into households- coupled with new Census Bureau data, leads to an estimate of a 1.37 million annual growth in households in the second half of the decade.
During the same period, there should be an annual increase in vacancy units of 160,000. This component of housing demand includes demand for second homes and vacant homes for sale and for rent required to facilitate the liquid operation of a healthy housing market. Vacancy rates have trended close to their long-term averages.
The third and final component of housing demand is net removals, which include houses lost to intentional demolition and disasters, and the net conversion of structures between residential and non-residential use. Fannie Mae "conservatively" estimates 230,000 net removals per year or 0.2 percent of the housing stock. Summing up all the units of housing required for new households, vacant units, and net removals, Fannie Mae expects a "normal" or sustainable housing supply of 1.76 million units of single-family, multifamily, and manufactured homes.
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