According to estimates from the Housing and Urban Development and Commerce Departments, single-family starts expanded in November, albeit off downwardly revised numbers from prior months. The three-month moving average for single-family construction is currently at a post-recession high, which combined with strong reporting from the NAHB/Wells Fargo Housing Market Index (HMI), indicates future growth ahead.
Single-family starts increased 2.4% to a 938,000 seasonally adjusted annual pace in November. Multifamily starts increased 4.9% to a 427,000 annualized rate.
On a year-to-date basis, single-family starts are just 0.4% lower than the first eleven months of 2018. NAHB’s forecast, and the forward-looking HMI, suggest that future data will show modest monthly gains due to lower mortgage interest rates. Indeed, the rate of single-family permits has been increasing since April as the home construction rebound continues. We expect additional single-family growth, as areas beyond the exurbs respond to for-sale housing demand and healthy labor markets.
On a regional and year-to-date basis, single-family starts are down 14% in the Northeast, 6% in the West, 5% in the Midwest and up 5% in the South – the only region with net gains in 2019. Land availability and cost is a key factor explaining these regional differences.
As of November 2019, there were 526,000 single-family homes under construction. September saw the first gain for this number since January, and the current count is roughly flat from a year ago. There are currently 644,000 apartments under construction, up 5% from a year ago and marking a post-Great Recession high. The cumulative economic impact of the 2019 rebound in home construction is seen in the graph below.