Fueled by strong single- and multifamily growth, housing starts rose 15.7% to a seasonally adjusted annual rate of 1.093 million units in July, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This is the highest number since November 2013.
“A return to production levels over one million confirms consumer confidence continues to improve,” said Kevin Kelly. “Propelled by a healthier economy, more and more people are feeling ready to buy a home.”
Single-family housing starts were up 8.3% to a seasonally adjusted annual rate of 656,000 units in July, while multifamily production jumped 28.9% to 437,000 units. Multifamily production has not been this high since February 2006.
Regionally in July, combined single- and multifamily housing production rose in the Northeast, South and West, with respective gains of 44 percent, 29 percent and 18.6 percent. Total production fell by 24.8 percent in the Midwest from an unusually high June level.
Issuance of building permits registered an 8.1 percent increase to a seasonally adjusted annual rate of 1.052 million units in July. Multifamily permits rose 21.5 percent to 412,000 units while single-family permits increased by 0.9 percent to 640,000 units.
The Northeast, South and West registered overall permit gains of 18.8 percent, 9.6 percent and 7.2 percent, respectively, while the Midwest posted a 0.6 percent loss.
Nationwide housing production edged up 0.8 percent to a seasonally adjusted annual rate of 917,000 units in February, according to newly released figures from HUD and the U.S. Census Bureau. This slight upward movement represented gains in both the single-family and multifamily sectors, with single-family housing starts reaching their fastest pace since June of 2008.
“Demand for new homes and apartments is definitely rising as the spring buying season approaches and more young people move out on their own,” said Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C. “Builders are responding to this improved demand by putting more crews back to work and pulling more permits for future construction, though this positive activity is being constrained by continuing issues with appraisals and credit availability for both builders and buyers, and also by newly arising challenges such as lot shortages and increased costs for labor and materials.”
“Today’s report indicates that, despite some bumps in the road, overall housing production continues on the solid upward trend that we saw throughout 2012,” noted NAHB Chief Economist David Crowe. “Moreover, further gains in permit issuance are a positive sign that home construction will continue to drive economic and job growth in the coming months, albeit at a slower pace than would be possible without certain limiting factors.”
Single-family housing starts eked out a 0.5 percent gain to a seasonally adjusted annual rate of 618,000 units in February, bringing them to their highest level since June of 2008, while multifamily starts rose 1.4 percent to 299,000 units.
Regionally in February, combined single- and multifamily housing production rose strongly in the Northeast and Midwest with gains of 18.4 percent and 37.5 percent, respectively, but fell 5.7 percent and 7.2 percent in the South and West, respectively.
Overall permit issuance rose 4.6 percent to 946,000 units in February, the strongest pace since June of 2008. That gain included a 2.7 percent increase to 600,000 units on the single-family side and an 8.1 percent increase to 346,000 units on the multifamily side.
The Midwest, South and West posted respective gains of 1.4 percent, 9.9 percent and 6.4 percent in permitting activity for February, while the Northeast posted an 18.2 percent decline.
Chief Economist David Crowe and his fellow presenters at NAHB’s fall construction forecasting event carried a mostly upbeat tone. The focus of the event was regarding the housing industry and the evolution of housing finance policies. The speakers noted that the most recent data seems to be “in sync” with the notion that a recovery is truly underway. Much of the multifamily and single family remodeling has made considerable progress toward returning to pre-down turn levels. Stating that remodeling is already back to 100% of production relative to 2000-2002 spending and multifamily is at 64%, and single family is around 40% of normal production. However, Crowe noted that weak job growth, credit issues, and appraisal problems continue to slow the pace of recovery. This forecast is contingent on Congress coming up with a solution to avoid the “fiscal cliff” posed by mandated government spending cuts.
This year, Crowe is projecting that single-family starts will finish this year at 528,000 units, then rise 26% to 665,000 units in 2013 and another 30% to 865,000 units in 2014. Meanwhile, he expects multifamily starts to finish 2012 with 224,000 units, followed by a modest rise to 238,000 units in 2013 and another gain to 275,000 units in 2014.
The longest to recover will be the local markets, because those were the hardest hit in the housing downturn.
Areas that are at “normal” housing production levels include North Dakota, Washington, D.C., and parts of Wyoming and Texas.
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Single-family housing production increased for a third consecutive month and builders pulled more permits for both single- and multifamily construction in May, according to newly released figures from HUD and the U.S. Census Bureau. The data reveals that the seasonally adjusted annual rate of single-family housing starts rose 3.2 percent to 516,000 units – the best pace since December of 2011.
In the Upstate, single-family housing starts continue to outpace the state and the nation:
- Greenville, year-to-date (through April) starts total 700, up 32 percent
- Spartanburg, starts total 200, up 28 percent
- Anderson, starts total 110, up 95 percent
“Today’s report is a good sign that builders are cautiously moving to replenish their depleted inventories of single-family homes in response to increasing buyer demand,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “In certain housing markets across the country, the momentum toward recovery is gradually building, though tough credit conditions and inaccurate appraisal values continue to weigh down that progress.”
“The latest data provides evidence of the kind of slow but steady growth that we expect to see in housing production through the end of the year, and shows that housing continues to regain strength regardless of some weakening in other parts of the economy,” said NAHB Chief Economist David Crowe. “Particularly encouraging are the gains in permit issuance posted in both the single-family and multifamily sectors in May, which are indicative of builders’ intentions to start new projects in the coming months.”
While overall housing starts posted a 4.8 percent decline to a seasonally adjusted annual rate of 708,000 units in May, all of the decrease was on the more volatile multifamily side. Single-family starts rose 3.2 percent to 516,000 units as multifamily starts declined 21.3 percent to 192,000 units.
Regionally, dips on the multifamily side drove down combined housing starts in all but the West, which registered a 14.4 percent gain. The Northeast, Midwest and South posted declines in total housing starts of 20.3 percent, 13.3 percent and 6.1 percent, respectively.
However, strong gains in new permitting activity for both single-family and multifamily homes drove the combined permitting number for May up 7.9 percent to a seasonally adjusted annual rate of 780,000 units – the strongest pace since September of 2008. Single-family permits were up 4.0 percent to 494,000 units (best pace since March of 2010) while multifamily permits gained 15.3 percent to 286,000 units.
Three out of four regions posted gains in combined permit activity in May. The Midwest, South and West posted gains of 6.1 percent, 11.1 percent and 10.5 percent, respectively, while the Northeast registered an 8.0 percent decline.
There has been considerable commentary from the media and some economists that what is driving the continuation of the housing market downturn is an over-supply of homes. However, NAHB economists report that home builders have under built since 2008 in terms of production necessary to meet demand.
Karl Smith, an assistant profession of behavorial sciences at the University of North Carolina Chapel Hill, writes in the Atlantic that “America is closer to a housing shortage than a housing surplus.”
“The prices of houses rose to extremely high levels during the 2000s. However, total home building did not. What was noticeable about that period was the fraction of homes that were site-built single family homes, rather than duplexes, apartment buildings or mobile homes. However, the total amount of homes built barely reached records. In absolute terms not many more homes were being built in 2005 than in the early 1980s when the population was smaller and immigration less of a force.”