Compared to 2015 totals, townhouse construction increased 12%, and custom single-family homes grew 8% in 2016 to a post-recession high. Much of this is due to an easing of credit standards and the return of more first-time home buyers. But in 2017, many of the same challenges will persist.
NAHB’s Multifamily Production Index (MPI) posted a gain of two points to 55 in the fourth quarter of 2016. The MPI has been at 50 or above for five straight years.
Shortages of buildable lots and skilled labor, excessive regulations, rising mortgage interest rates and ongoing home price appreciation pushed housing affordability in the fourth quarter of 2016 to its lowest point since the third quarter of 2008, according to the NAHB/Wells Fargo Housing Opportunity Index. released this morning.
Housing starts returned to trend in January, dropping 2.6% to a seasonally adjusted annual rate of 1.246 million units, according to newly released data from HUD and the Census Bureau.
Although employment and home price levels have returned to or exceeded normal, home construction during the fourth quarter of 2016 remained tepid in many markets due to regulatory and supply-side constraints.