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Single-Family Housing Starts Down in November

Phil Hall
Dec 18, 2018
Single-family housing starts in November were at a rate of 824,000

Single-family housing starts in November were at a rate of 824,000, a 4.6 percent decline from the revised October figure of 864,000, according to new data from the U.S. Census Bureau and the Department of Housing and Urban Development. Privately-owned housing starts in November were at a seasonally adjusted annual rate of 1,256,000, which is 3.2 percent above the revised October estimate of 1,217,000, but 3.6 percent below the November 2017 rate of 1,303,000.
Single-family authorizations in November were at a rate of 848,000, a scant 0.1 percent uptick from the revised October figure of 847,000. Privately-owned housing units authorized by building permits in November were at a seasonally-adjusted annual rate of 1,328,000, which is five percent higher than the revised October rate of 1,265,000 and 0.4 percent above the November 2017 rate of 1,323,000.
Single-family housing completions in November were at a rate of 772,000, a 5.4 percent drop from the revised October rate of 816,000. Privately-owned housing completions in November were at a seasonally-adjusted annual rate of 1,099,000, 0.4 percent above the revised October estimate of 1,095,000 but 3.9 percent below the November 2017 rate of 1,144,000.
“Housing starts increased for the first time in three months, driven by a surge in multifamily construction," said Joel Kan, AVP of Economic and Industry Forecasting for the Mortgage Bankers Association (MBA). "However, single-family starts dropped over four percent to their lowest monthly level since March 2017, and even more on a year-over-year basis–nearly 13 percent. Homebuilding activity in November was consistent with the less favorable builder sentiment readings we’ve seen in recent months, as builders are still challenged by several factors, including high input and labor costs. These results also likely reflect slower demand for new single-family homes, as emerging economic and financial market uncertainty, coupled with affordability challenges, are keeping some potential  homebuyers away.”
The slowdown in November’s housing starts is mirrored in consumer sentiment on homebuying during this time of the year. The National Association of Realtors’ (NAR) fourth quarter Housing Opportunities and Market Experience survey found only 34 percent of respondents strongly indicating it is now a good time to buy, down from 39 percent in the third quarter and 43 percent one year ago. The percentage of those who believe that is not a good time to buy was 37 percent, unchanged from the third quarter and up from 28 percent one year ago.
“Consistently fast-rising home prices well in excess of income growth over recent years have left buyers frustrated while slowly enticing would-be sellers to consider listing,” said NAR Chief Economist Lawrence Yun.
While fewer homebuying opportunities continue, renters are experiencing higher costs of housing. New data from CoreLogic found single-family rent prices increased three percent year-over-year in October. Low-end rental prices recorded a 3.9 percent annualized increase compared to high-end price gains of 2.6 percent
“While employment growth helps feed rent growth, this relationship doesn't always hold up, especially for cities with very high rents,” said Molly Boesel, Principal Economist at CoreLogic. “For example, employment growth in Seattle this October was more than double that of the U.S., but rent growth during the same time period was weak. Of the 20 metros analyzed [by CoreLogic], Seattle ranks among those with the highest rent, which suggests there is a limit to how much rents can increase.”

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