Housing starts are on the rise, reaching a post-recession high in November. The West and South regions of the country are seeing the bulk of the increase in new-home construction.
Housing starts—which include single-family and multifamily production—increased 3.3 percent nationwide in November to a seasonally adjusted annual rate of 1.3 million units, the Commerce Department and the U.S. Department of Housing and Urban Development reported Tuesday.
Broken out, single-family home construction increased 5.3 percent in November to a seasonally adjusted annual rate of 930,000—the highest rate since before the recession. Single-family starts are now 8.7 percent higher than a year ago. Multifamily starts, on the other hand, dropped 1.6 percent to 367,000 units in November. However, that follows a strong reading in October.
“A welcoming trend is developing in the housing sector as builders are able to bring more supply to the market on a consistent basis,” says Lawrence Yun, chief economist of the National Association of REALTORS®. “There is still more room for improvement, as the latest figure is still not yet at the long-term 50-year average of producing 1.5 million units per year. If this rising trend continues, the worst of the supply shortage could soon end, which would help slow price appreciation in 2018. That would be a huge, welcoming relief for renters seeking to become homeowners.”
In November, housing production rose by the most in the West, increasing 19 percent month over month. The South saw an 11 percent gain. Housing starts plunged nearly 40 percent in the Northeast and by nearly 13 percent in the Midwest.
Housing permits—a gauge of future production—dropped 1.4 percent in November to a seasonally adjusted annual rate of 1.3 million units. The decrease in permits is due to a drop in multifamily permits, which were down 6.4 percent to 436,000. Single-family permits increased 1.4 percent in November to a reading of 862,000.
"With low unemployment and increasing owner-occupied household formation, single-family starts should continue to make gains in 2018,” says Robert Dietz, the National Association of Home Builders’ chief economist.
Source: National Association of Home Builders and National Association of REALTORS®
