Housing starts were at a seasonally adjusted annual rate of 1.547 million in November, an increase of 1.2% compared with October and up 12.8% compared with November 2019, according to estimates from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
Starts of single-family homes were at a rate of 1.186 million, an increase of 0.4% compared with October and up 27% compared with November 2019.
Starts of multifamily dwellings (five units or more per building) were at a rate of 352,000, an increase of 8.0% compared with the previous month but down 16% compared with a year earlier.
Building permits were also up in November. They were at a seasonally adjusted annual rate of 1.639 million, an increase of 6.2% compared with October and up 8.5% compared with November 2019.
Permits for single-family homes were at a rate of 1.143 million, an increase of 1.3% compared with October.
Permits for multifamily properties were at a rate of 441,000, an increase of 22.8% compared with the previous month.
Housing completions, at an annual rate of 1.163 million, were down 12.1% compared with October and down 4.8% compared with November 2019.
Odeta Kushi, deputy chief economist for First American, notes that the 27% year-over-year increase in single-family starts was the highest pace since 2007.
In addition, “permits for single-family homes, a leading indicator of future starts, increased 22 percent relative to last year, and 1.3 percent compared to last month.,” Kushi says. “This is a welcome sign of new single-family inventory to come.”
“The continued rise in housing starts signals the single-family sector will lead the way for new-home construction,” Kushi says. “2021 may be the year of the home builder as a massive housing shortage, coupled with demographic and behavioral trends favoring single-family homes, sets the stage for builders to ramp up construction.”
“The fundamentals driving new-home sales are strong – low mortgage rates, a limited supply of existing homes for sale, and sturdy demand driven by millennials who are aging into home-buying,” she adds.
However, home builders will continue to face supply-side challenges in 2021.
“Residential construction employment is still not back to pre-pandemic levels, and construction material costs remain high,” Kushi says. “These headwinds could slow the home-building momentum at a time when the housing market desperately needs more supply.”
Austin Niemiec, executive vice president of Rocket Pro TPO, says “it does not look like construction will slow down tremendously over the winter months, as builders seem to understand the importance of their role in keeping home prices affordable.”
“With inventory being so low, these new houses are bound to be swept up at incredible speeds,” Niemiec says. “Mortgage brokers across the country should not only make sure they are reinforcing their relationships with real estate agents but also ensure all their processes are fine tuned to provide incredible service to every home buyer.”
There has been so much demand for single-family homes in recent months that inventory has continued to drop even as production has ramped up.
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