Housing Construction Up in November

Housing starts and permits were up in November 9% and 6% respectively. Both single-family and multifamily activity increased although the multifamily sector continued its much more aggressive move forward by a starts increase of 25% and a permits increase of 14%.
The level of annualized starts was 685,000, which is the highest in three years. Similarly, the annual rate of apartment construction was 238,000, also the highest in over three years. The single-family annual construction rate was 447,000, which was the best since June 2011. While single-family permits and starts did move forward, the year-end numbers will likely be the worst in the over 50 years of similar data and likely the worst since 1945 when compared to available data.
The continued but slow rise in the three-month moving average of single-family starts and permits since late spring 2011 does support the NAHB forecast for continued slow improvement in that sector. The NAHB/Wells Fargo Housing Market Index has increased for the last three months and the NAHB/First American Improving Markets Index has also shown steady increases since its introduction in September. Many hurdles remain in the path forward including tight credit for home buyers and builders, unreliable appraisals because of poor adjustments to distressed sales and buyers’ concern about house prices.
Apartment construction continues to improve significantly as vacancy rates fall and developers and builders expect more household formations to choose renting. The NAHB Multifamily Production Index and Multifamily Vacancy index have shown continued improvement supporting the NAHB expectation for continued increases in this sector as well.



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