Homebuilders powered ahead with newly started projects during the month of November, bucking expectations of a seasonal slowdown.
Builders kicked off construction on 129,400 new housing units last month — a half-percent increase from October, and 11.8 percent higher than expected after adjusting for typical seasonal building trends.
These numbers from the U.S. Census Bureau’s monthly residential construction report tell a story of an industry that may be starting to overcome the severe supply-chain issues that have upended pricing for material goods throughout the pandemic.
“It’s a hopeful sign,” Nerdwallet home and mortgage expert Holden Lewis said in a statement. “This one-month surge isn’t going to relieve the dire shortage of homes, but if vigorous home construction continues every month for the next decade, we’ll be in good shape.”
The new starts included single-family and multifamily housing units, and amounted to a seasonally adjusted annual rate of nearly 1.7 million. Compared to November of last year, that’s an 8.3 percent annual increase.
These numbers also amount to a reversal of a recent downward trend observed since the spring. It’s the highest annual rate of new starts since March.
Housing starts took an enormous hit in the early months of the pandemic last year as shutdowns and supply shortages were felt by homebuilders across the U.S. Operations quickly ramped back up to roughly where they were just before the pandemic began, but builders have still fallen short of the general demand for new homes.
But these gains weren’t felt equally throughout the country.
The eastern part of the country accounted for the vast majority of the growth in housing starts. In the Northeast, the seasonally adjusted annual rate of new starts rose by more than 27 percent from October to November. The South also saw strong growth, with an 18 percent monthly increase recorded over the same span.
Home starts were also strong in the West, with 5 percent growth in November from the previous month on a seasonally adjusted basis. The Midwest saw a seasonally adjusted monthly decline of 7 percent.
Despite the ramped-pace of construction throughout much of the country, the industry is still feeling the disruptions of the pandemic, according to a recent analysis from the National Association of Homebuilders.
Because of supply-chain issues, the number of single-family units that are authorized to start construction but are sitting unbuilt is up more than 40 percent from the same period last year, Robert Dietz wrote on the trade association’s website..
“Despite the increase, builders are getting increasingly concerned about affordability hurdles ahead for most buyers,” Dietz wrote. “Building material price increases and bottlenecks persist and interest rates are expected to rise in coming months as the Fed begins to taper its purchase of U.S. Treasuries and mortgage-backed debt.”
Still, builder sentiment remains fairly high. The trade group’s Housing Market Index rose by one point to 84 in December after recording a three-point increase in November.
Builders were particularly optimistic about the sales environment for new homes, with the index tracking this sentiment rising to 90.
