More new-home construction is coming, and builders are increasingly confident about the direction of the market. Housing starts in November rose 3.2% to a seasonally adjusted annual rate of 1.37 million units, the U.S. Commerce Department reported Tuesday.
Broken out, single-family home construction rose 2.4% year over year in November, while the multifamily sector, which includes apartments and condos, rose 4.9%.
In the eye of a massive housing shortage nationwide, the latest new-home numbers are a positive sign. However, they still fall drastically short of demand, says Lawrence Yun, chief economist for the National Association of REALTORS®. He says housing starts are short by 135,000 compared to the long term average—and well short of the 5 million to 6 million that is needed to fully end the housing shortage.
“More home construction appears to be on the way as we move into 2020, as reflected in the very high confidence of home builders,” Yun says. “They are clearly recognizing an improving business opportunity. Some innovation in the industry is required as construction workers are hard to obtain in the current tight job market conditions. Modular factory-produced aspects need to be considered more intently to boost productivity. Overall, more construction will mean more housing inventory to choose from for consumers. Home sales can then easily rise while taming the fast growth in home prices.”
Single-family housing starts have been posting a steady improvement since earlier this year, adds Robert Dietz, chief economist of the National Association of Home Builders. Year-to-date, single-family and multifamily starts are up by the most in the South, rising 7.4%, and by 0.9% in the Northeast. Meanwhile, starts are down 5.8% in the Midwest and 8.7% in the West.
Housing permits, a gauge for future construction, rose 1.4% in November to a 1.48 million annual rate.
The National Association of REALTORS® will be releasing its latest existing home sales report on Thursday.
Source: National Association of REALTORS® and National Association of Home Builders
