The US single-family home market still in the grip of massive shortages, despite overall housing construction close to 2006 levels

There are still not enough houses under construction. That’s bad news for first-time homebuyers in Tuesday’s U.S. housing data, showing housing starts rose at a seasonally adjusted annual rate of 1.62 million in August. .

The good news shows that housing starts climbed 3.9% from the previous month, approaching the 1.8 million annual rate last seen in 2006, before new construction collapsed following the 2008 financial crisis.

The biggest problem ? Single-family home starts fell in August for a second consecutive month at an annual rate of 1.05 million, with a monthly increase driven by 632,000 new multi-family housing starts in buildings of five or more units, according to US census data.

Read: New home construction activity improves, with builders focusing on high-margin projects

For context, the past decade has seen an average of 1.07 million housing starts per year (see graph), well below the annual average of 1.73 million for the past 20 years.

Annual starts in August close to 2006 levels

Tomvest Ventures Research

“The result was stronger than expected,” Barclays business team, led by Blerina Uruci, wrote on Tuesday despite the continued decline in new construction of single-family properties.

“In our opinion, the outlook for the housing market is still positive, but depends on easing supply bottlenecks”, including in LB00 lumber,
-0.07%
and with labor shortages, wrote Uruci’s team.

What to expect in the accommodation

Home prices have skyrocketed in the last year of the pandemic, with smaller metropolitan areas pushing up fees. Prices in Boise, Idaho, climbed 46%, followed closely by a 45% increase in Austin, Texas, according to Zillow data included in a new housing report from Tomvest Ventures.

The boom is partly due to low mortgage rates of 3% and the increase in remote working, but also a long-standing lack of sufficient new construction. TomVest’s Nima Wedlake pointed out that some 12.3 million US homes were formed from January 2012 to July 2021, while only 7 million new single-family homes were built in the same stretch.

See: The boom in the US real estate market is put to the test as people begin to return to the office

Shares of Home Builders DR Horton Inc. DHI,
-0.71%,
Lennar Corp LEN,
-0.91%.
and NVR Inc. NVR,
-0.50%
ended lower on Tuesday, while U.S. stock indexes, including the Dow Jones Industrial Average DJIA,
+ 0.21%
and the S&P 500 SPX index,
-0.11%
finished slightly lower for a second day after Monday’s rout.

“As Americans in their late twenties enter the home buying market over the next 2-4 years, we expect a period of sustained demand for housing,” Wedlake wrote.

“However, we also expect the supply of properties to accelerate over the next decade as baby boomers move out of their homes.”

To verify: It is the ‘golden age’ of American consumer credit, according to this Voya portfolio manager

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