MetLife Agricultural Finance Expects Housing Starts to be 16 Percent Below Consensus

MetLife Inc

's MetLife Agricultural Finance did a fresh survey pointing out that the housing starts would be 16 percent below the consensus by the end of the current decade in the United States. That meant, housing starts would reach 1.5 million by the same period. MetLife pointed out the reasons that the huge Millennial generation was yet to reach home-buying age and credit remains tight. According to the survey, the resulting weakened demand for lumber would continue to weigh on pricing, as well as, the demand in the immediate term. However, the company indicated that emerging supply shortages would boost timberland investments in the United States based on Millennials. MetLife Agricultural Finance's Research Director, Hugues Rinfret, commented, "We believe that the primary headwind to a fast recovery in housing starts is that the homeownership rate will remain below the historical average of 65 percent through 2020. This is due to continued credit availability constraints and its impact on 35-44 year-olds, as well as the fact that 90 percent of the Millennial generation have not yet reached age 31, the median age of first time home buyers." The company stated that the lumber market was closely tied to housing starts in the United States. MetLife said that Homeownership rates were at 36-year lows and, at the end of the last year, lumber prices were close to 20 percent lower than their 2004 peak. For the next five years, the company expects lumber demand and pricing to remain below the historical average. However, the survey provided a favorable forecast for lumber demand in the medium and long term. The optimism is based on the belief that the Millennials would ultimately purchase single-family homes in higher numbers, coupled with the emergence of non-housing demand drivers. The stock advanced 0.49 percent on Wednesday.