Single-Family Starts Post Slight Decline as Builders Grapple with Affordability Issues

Filed in Economics, Multifamily by on November 20, 2018 2 Comments

home framed and under constructionRising housing affordability concerns continue to weigh on single-family production even as total housing starts edged higher in October.

According to newly released data from the U.S. Department of Housing and Urban Development and the Commerce Department, total housing starts rose 1.5 percent in October to a seasonally adjusted annual rate of 1.23 million units from an upwardly revised September reading. Year-to-date, new housing starts are 5.6 percent above their level over the same period last year.

The October reading of 1.23 million is the number of housing units builders would start if they maintained this pace for the next 12 months. Within this overall number, single-family starts edged down 1.8 percent to 865,000 units. Meanwhile, multifamily starts—which include apartment buildings and condos—rose 10.3 percent to 363,000.

“This month’s decrease in single-family starts isn’t a surprise given the drop in our builder confidence index,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “Builders are showing caution as mounting housing affordability concerns are forcing some consumers to delay making a home purchase.”

“Single-family starts were strong at the beginning of the year, but weakened this summer and have remained soft,” said NAHB Chief Economist Robert Dietz. “Despite this softness, 2018 construction volume is set to be the best since the downturn. A growing economy and positive demographic tailwinds are supporting housing demand as interest rates rise. However, policymakers should take note of the November decline in builder confidence as a sign that housing affordability conditions will weigh on the housing market going forward.”

Overall permits—which are an indicator of future housing production—registered a 0.6 percent drop in October to 1.26 million. Single-family permits fell 0.6 percent to an 849,000 unit pace while multifamily permits dropped 0.5 percent to an annualized rate of 414,000.

Looking at the regional numbers on a year-to-date basis, combined single-family and multifamily housing starts rose 13.5 percent in the West and 5.5 percent in the South. Starts fell 0.6 percent in the Midwest and 4.8 percent in the Northeast.

Also on a year-to-date basis, permit issuance rose 7.6 percent in the South and 3.9 percent in the West. Permits were down 2.4 percent in the Midwest and 5 percent in the Northeast.

Comments (2)

Trackback URL | Comments RSS Feed

  1. John Bitely says:

    If we as builders don’t get the public on line with reducing government controls and requirements on building developments and roads the lot costs will continue to be so high that the average home buyers can’t afford the dirt for the home to sit on. We can’t get the local government to listen to us but if we get the public to speak they have to pay attention or get voted out.

    • Jim McCulley says:

      This needs to be a nationwide message pushed at the highest to lowest levels of government with targeted marketing and buy-in by the public at large. This is our biggest issue to tackle and all other issues are wrapped up in this.

Leave a Reply

Your email address will not be published. Required fields are marked *