Builders are struggling with affordability issues
Homebuilders are lacking confidence in the market for single-family homes and housing starts for this sector are weaker as a result.
Figures from the US HUD and Commerce Dept. show that overall starts were up 1.5% in October to a seasonally adjusted annual rate of 1.23 million. September’s figure was revised upwards. Year-to-date, starts are up 5.6% from the same period of 2017.
For single-family starts, there was a decline of 1.8% to 865,000 units while multifamily starts jumped 10.3% to 363,000.
“Single-family starts were strong at the beginning of the year, but weakened this summer and have remained soft,” said NAHB Chief Economist Robert Dietz. “Despite this softness, 2018 construction volume is set to be the best since the downturn. A growing economy and positive demographic tailwinds are supporting housing demand as interest rates rise. However, policymakers should take note of the November decline in builder confidence as a sign that housing affordability conditions will weigh on the housing market going forward.”
Combined single-family and multifamily housing starts rose 13.5% in the West and 5.5% in the South; but fell 0.6% in the Midwest and 4.8% in the Northeast.
Permits decline
Overall permits were down 0.6% month-over-month in October to 1.26 million with single-family down 0.6% to an 849,000 unit pace; and multifamily permits easing 0.5% to an annualized rate of 414,000. Year-over-year, overall permits were down 6%.
“While the overall number of permits issued, which can signal how much construction is in the pipeline, decreased by 6.0% compared with last year, a closer look reveals a bright spot, as permits for multi-family homes (2 to 4 units) increased 8.6% from last year,” commented Mark Fleming, chief economist at First American.
