Nationwide home building slid in September 9.4% after seeing a 12 year high in August. The revised figures shows a seasonally adjusted amount of 1.256 units as the numbers have been revised due to deteriorating construction numbers in the multi-family sector according to the Commerce Department.
Marketwatch reports that construction of apartments, condo complexes and other projects with five units or more sank 28% in September. Permits to build new houses also fell about 3% to a 1.39 million annual pace. The number of permits filed was nearly 8% higher year to year according to the report. On a positive note, new construction on single-family homes actually rose 2.8% over 2018 to an annual rate of 918,000. This is the highest level since the start of 2019.
Joel Kan, associate VP of economic and industry forecasting for the Mortgage Bankers Association remains positive on the numbers. He states “Housing starts fell 9% in September, led by a 28% drop in multifamily starts. The decline in multifamily starts was a reversal from a 41% increase in August. The 3-month average was down around 3%. More importantly to home purchase market, single-family starts remained robust, increasing slightly to a pace of 918,000 units – the highest since May 2019. However, the increase in single-family starts was solely concentrated in the South. Most of the country still needs more new construction to meet job growth and demand. It is promising that single-family permits continued to rise, increasing for the fifth consecutive month. As reported earlier today in MBA’s September Builder Applications Survey, some of the weakness in the data in September was likely the result of increased market volatility and uncertainty. Overall, the underlying trends remain relatively strong. The upward trend in single-family starts and permits bodes well for increased housing supply in the coming months, which has been a limiting factor for housing growth for a number of years.” Lawrence Yun, chief economist for the National Association of Realtors believes that developers need to ramp up activity in order to keep up with demand. He states that ” With new condo-rules on FHA mortgages, developers should anticipate rising demand for multifamily units. Building more homes is needed to help address housing affordability for both renters and home buyers. Increased supply will manage rent affordability, rather than the terrible policy of rent control. Furthermore, more home building will help boost economic growth. It is very likely that the GDP growth rate in the second half of this year will be light at under 2%. To get it moving higher, housing starts need to significantly ramp up.”
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