2 Key Factors Driving Single-Family Housing

Filed in Economics by on July 22, 2019 2 Comments

NAHB Chief Economist Robert Dietz recently provided this housing industry overview in the bi-weekly newsletter Eye on the Economy:

Job growth and lower mortgage rates are the positive economic variables that will support near-term growth for single-family construction. In June, 224,000 jobs were added to the nation’s workforce, as the unemployment rate held at just 3.7%.

However, the low unemployment is further aggravating the scarcity of skilled laborers. In May, there were 369,000 unfilled jobs in the construction sector.

Likewise, lower mortgage interest rates — averaging near 3.8% for a 30-year fixed-rate, according to Freddie Mac — are helping to promote housing demand, although on a limited basis.

For example, pending sales of existing homes increased 1.1% in May. However, those sales were still down on a year-over-year basis — the 17th straight month of such declines, largely due to ongoing housing affordability constraints.

Nonetheless, builder confidence remains positive, increasing one point in July to a level of 65. The NAHB/Wells Fargo Housing Market Index has been in the low- to mid-60s for six months. This month’s uptick was matched by a 3.5% gain for single-family starts in June, rising to an annual rate of 847,000.

Still, single-family construction in 2019 is down approximately 5% compared to the first half of 2018. Thus far, the South is the only region reporting a net gain in 2019.

Single-family permitting is lagging as well. However, the number of homes authorized but not yet under construction has declined to 85,000 after reaching a peak of 103,000 in December.

Multifamily construction also declined in June by about 10%, following a particularly strong month of May. Multifamily development has been roughly flat thus far in 2019, with 5-plus unit production up just 0.2% for the first half of the year.

For more, visit Eye On Housing.

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  1. Carroll Raley says:

    The lumber industry decided in April of 2018 that they were going to take their profits and run and leave their partners, namely the Homebuilders, to face the music and the wrath of the homebuyers that wanted to purchase a new home, because they are behind the scenes and don’t have to worry about that because they had collected double the amount of profit they would normally have made. They created what is happening now and no amount of correction can justify the loss of buyers that the Homebuilders depend on to feed their families.

  2. CostumeLooks says:

    A number of factors have converged over the past few years to increase the price of newly built, single-family housing, including homes at the lower end of the market.

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