Plagued by historically low inventory, the construction industry rallied in November with a 5.3 percent boost in single-family housing starts to an annualized rate of 930,000, up from 883,000 in October and marking a 10-year high.
Until today, that number had remained frustratingly out of reach since the subprime mortgage crises.
Privately-owned housing starts in general, meanwhile, were up 12.9-percent year-over-year to 1.297 million and followed hard on the heels of gains made in October, when overall housing starts rose to a strong annual rate of 1.256 million units in the aftermath of powerful hurricanes over the summer that slowed activity in Texas and Florida.
November 2017 housing starts from U.S. Census Bureau Credit: U.S. Census Bureau
The uptick in single-family home construction was most conspicuous in the South, where single-family home starts rose 8.4 percent, to 515 units, from the month prior. Also in the West, which was up 11.4 percent, to 224 units, according to the Census data.
On Tuesday, real estate industry officials lauded the surprising increases. But they also tempered their praise with concern that — despite high demand for housing, low unemployment and a robust and growing economy — new construction activity was still far below the 50-year average of 1.5 million units.
“A welcoming trend is developing in the housing sector as builders are able to bring more supply to the market on a consistent basis,” said National Association of Realtors Chief Economist Lawrence Yun. “The latest monthly figure of near 1.3 million annualized housing starts is solid, and the growth is mostly coming both in the West and for single-family homes.” Yun continued:
“There is still more room for improvement, as the latest figure is still not yet at the long-term 50-year average of producing 1.5 million units per year. If this rising trend continues, the worst of the supply shortage could soon end, which would help slow price appreciation in 2018. That would be a huge, welcoming relief for renters seeking to become homeowners.”
Multifamily building construction, meanwhile, remained a sore spot for the real estate industry, spiraling 1.6 percent to a rate of 367,000 units in November. Building permits dropped 1.4 percent, to 1.298 million units.
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Correction: This article was updated and corrected to clarify that there were 1.297 million total housing starts recorded for November, not single-family as previously indicated. We regret the error.