economic outlook
42
MICA MESSENGER
down enough to make a big difference 
in single-family construction,” said 
Bill Conerly, Principal of his own 
consulting firm in Lake Oswego, Oregon 
(conerlyconsulting.com).
Wary builders. Reluctant sellers. 
Sluggish buyers. It’s all having an 
effect on the housing market. Oxford 
Economics expects starts to fall by 4.3% 
in 2025 and decline by another 2.3% in 
2026 after dropping by 3.5% in 2024. 
Prices for existing homes are expected 
High prices are a bit of a mixed 
bag,” said Hoyt. “They undermine 
consumer purchasing power and 
confidence, but they also support nominal 
sales by lifting the prices of the goods 
retailers are selling.”
to increase only 1.5% in 2025 and 2.3% 
in 2026 after rising by 4.4% in 2024. 
Concerned about the rising cost of 
living, consumers are cutting back on 
spending of all kinds. Their hesitancy 
affects the retail sector, which is an 
important driver and bellwether of the 
economy. “Our forecast for year-over-
year retail sales growth is 3.8% for 2026, 
down from the 4.5% of 2025,” said Scott 
Hoyt, Senior Director of Consumer 
Economics for Moody’s Analytics 
(economy.com). Much of the increase 
in both years is due to inflation. “High 
prices are a bit of a mixed bag,” said 
Hoyt. “They undermine consumer 
purchasing power and confidence, 
but they also support nominal sales by 
lifting the prices of the goods retailers 
are selling.”
Construction woes
Outside of the single-family home 
market, contractors are having 
problems of their own. Multifamily 
builders, working through a backlog of 
units under construction, are hesitant 
to break ground on new ones. “I think 
we’ll see less multifamily construction 
in 2026,” said Conerly. “Vacancy rates 
are going up and rents have been 
coming down at the rate of about one 
percent a year.”
Meanwhile, contractors attached to the 
commercial, office and hotel markets are 

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