Housing starts took something of a tumble last month, according to new data from the U.S. Census Bureau and the U.S. Department of Housing & Urban Development (HUD).
Single-family housing starts in November were at a rate of 828,000; 4.1 percent below the revised October figure of 863,000. Privately-owned housing starts were at a seasonally adjusted annual rate of 1,090,000, which is 18.7 percent below the revised October estimate of 1,340,000 and 6.9 percent below the November 2015 rate of 1,171,000.
However, single-family housing completions in November were at a rate of 774,000, up 3.3 percent from the revised October rate of 749,000, while privately-owned housing completions were at a seasonally adjusted annual rate of 1,216,000, which is 15.4 percent above the revised October estimate of 1,054,000 and 25 percent above the November 2015 rate of 973,000.
Also on the rise were single-family authorizations, which were at a rate of 778,000, a 0.5 percent increase from the revised October figure of 774,000. But privately-owned housing units authorized by building permits were at a seasonally adjusted annual rate of 1,201,000, which is 4.7 percent below the revised October rate of 1,260,000 and is 6.6 percent below the November 2015 estimate of 1,286,000.
The new data brought a grim reaction from Lawrence Yun, chief economist at the National Association of Realtors (NAR).
“There’s little to cheer about regarding residential construction in November,” Yun lamented. “The fall in single-family housing starts offers zero relief to the housing inventory shortage throughout the country. Moreover, the collapse in multifamily starts assures continued robust growth in rents next year. Housing costs are rising and this trend will nudge up the broad consumer price inflation enough to surpass three percent next year, which is easily above the Federal Reserve’s desired inflation target. The soft housing starts also assures continued sluggish expansion in the overall economy.”
Separately, new data from the real estate brokerage Redfin reported that home prices shot up on a year-over-year measurement by 7.7 percent in November, the largest increase in 14 months. While this occurred, the number of homes for sale continued a 14-month trend of declines, down 9.7 percent from last November—the largest plummet in the inventory level since July 2014. But while the number of homes for sale decreased, the overall sales pace of the market increased: the typical home sold in 50 days, six days faster than a year ago, which made last month the fastest November housing market since Redfin began tracking this data in 2009.
“Last year, we saw a temporary slump in November sales as new mortgage industry regulations went into effect and delayed some closings,” said Redfin chief economist Nela Richardson. “Now, those regulatory hurdles have largely been resolved but the market is by no means back to normal. We’ve seen a pickup in the number of Redfin customers going on tours and making offers the last two months as consistently good economic news has bolstered consumer confidence. The Federal Reserve’s decision to raise rates is unlikely to significantly dampen homebuyer enthusiasm as we enter 2017. We’re still expecting another year of rising prices and modestly growing home sales.”
Tim Rood, chairman of The Collingwood Group, viewed the Redfin data with a mixed opinion. “Home price appreciation continues to benefit from historically low inventory of new and existing homes,” he said. “However, the median sales price for a new home is still over $300,000 which goes to show you that we still have a problem meeting demand for entry-level homes.”
