Housing starts continued their three-month rise, following a 7% gain in September and a 1.9% gain in October, according to a new report from the National Association of Home Builders (NAHB) using data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
Housing starts rose 14.8% in November, as NAHB reported, to a rate of 1.56 million units. Single-family starts increased 18% to a rate of 1.14 million, but were down 7.2% year-to-date. The multifamily sector increased 6.9% to a rate of 417,000.
The data:
- On a regional and year-to-date basis, combined single-family and multifamily starts are 16.7% lower in the Northeast, 12.3% lower in the Midwest, 6.2% lower in the South and 14.3% lower in the West.
- Overall permits decreased 2.5% to a 1.46 million unit annualized rate in November.
- Single-family permits increased 0.7% to a 976,000 unit rate. However, single-family permits are down 8.4% year-to-date.
- Multifamily permits decreased 8.5% to an annualized 484,000 pace.
- Looking at regional permit data on a year-to-date basis, permits are 19.9% lower in the Northeast, 15.3% lower in the Midwest, 10.3% lower in the South and 12.8% lower in the West.
The takeaways:
“Lower interest rates and a lack of resale inventory helped to provide a strong boost for new home construction in November,” said Alicia Huey, chairman of NAHB. “And while these higher starts numbers are consistent with our latest builder survey, which shows a rise in builder sentiment and future sales expectations, homebuilders continue to contend with elevated construction and regulatory costs.”
“The single-family starts figure is remarkably strong, and we would not be surprised to see this figure revised lower or fall back slightly in the next month, given the nearly 20% rise in November,” said NAHB Chief Economist Robert Dietz. “NAHB is forecasting an approximate 4% gain for single-family starts in 2024, as mortgage rates settle lower, economic growth slows and inflation moves lower.”
“While housing starts have been dragging, the improved outlook for 2024 reflects expectations that lower mortgage rates will boost builder confidence and potentially lead to more construction across the U.S.,” added CoreLogic’s Chief Economist Dr. Selma Hepp. “Lower mortgage rates will also help improve affordability, which has fallen to some of the lowest levels in history.”
“As homebuilders ramp up production, more supply will reach the market,” commented National Association of REALTORS® Chief Economist Lawrence Yun. “In November, single-family home construction rose 18% from the prior month and was up a hefty 42% from one year ago. Homebuilders’ sales have been up this year despite high mortgage rates due to the offer of incentives on buying down interest rates and the long-held business model of offering co-op commission to buyer agents. That’s the free market way of doing business in a very competitive industry. Even more homebuilding will be needed with the housing shortage persisting in most markets. Home price appreciation can only moderate from drastically improved supply. Another 30% rise in home construction can easily be absorbed in the marketplace, especially in light of recent weeks’ plunge in mortgage rates.”
For the full report, click here.
