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Housing Starts Rebound in October Following Hurricanes
Nov. 17, 2017
Housing starts far outpaced expectations in October following a rebound in hurricane-affected areas, according to the latest data from the Census Bureau and Department of Housing and Urban Development.
Privately owned housing starts jumped to a seasonally adjusted rate of 1.29 million in October, a 13.7% increase from the revised September numbers. Starts are still 2.9% below October 2016. Single-family housing starts increased more than 5% in October to a rate of 877,000. Economists predicted housing starts to move forward at a rate of 1.185 million in October, said Reuters.
Meanwhile, building permits and housing completions increased 5.9% and 12.6%, respectively, from September to October. Both are trending upward compared to October 2016, as well. “The pace of building came back stronger than before the storms hit, which suggests the increase from recovery may have already started in Q4,” said Wells Fargo Securities. “The increase in permits issued also bodes well for residential investments in coming months.”
“Part of the gain for single-family construction in October was a rebound in Florida and Texas after project delays in September,” said the National Association of Home Builders. “Single-family starts in the South were up 17% compared to September.” Southern single-family housing starts were at their highest since September 2007.
The Northeast saw a sharp decline in single-family starts from September to October, dropping more than 22%. Western single-family starts also stepped back during that time while the Midwest increased. Overall, housing starts increased in each region except for the West, where total starts declined roughly 4%.
– Michael Miller, editorial associate
Builder Confidence Hits Eight-Month High
Nov. 16, 2017
Builder confidence for newly-built single-family homes is at an eight-month high, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
The index increased two points to a reading of 70 this month, the highest level since March.
“November’s builder confidence reading is close to a post-recession high—a strong indicator that the housing market continues to grow steadily,” said NAHB Chairman Granger MacDonald in a press release. Even with the slight move forward, “builders continue to face supply-side constraints, such as lot and labor shortages and ongoing building material price increases,” said NAHB in a release about the HMI.
The association expects to see a continued increase in single-family housing as the year ends. “Demand for housing is increasing at a consistent pace, driven by job and economic growth, rising homeownership rates and limited housing inventory,” said Robert Dietz, NAHB chief economist in the press release. The HMI is derived from the current single-family home sales landscape, sales expectations during the next six months and the traffic rate of prospective buyers.
Current sales conditions increased two points to 77, while buyer traffic edged upward two points to 50. Sales expectations for the next six months dipped one point to 77. Regionally, the West and Midwest stayed the same at 77 and 63, respectively. The Northeast climbed five points to 54, and the South increased one point to 69. The regional HMI readings are based on a three-month moving average.
The overall index was the second highest on record since July 2005.
– Michael Miller, editorial associate
Construction Input Prices Stable in October, but Lumber, Steel Prices Up Significantly from Last Year
Nov. 15, 2017
Construction input prices overall didn’t move in October from the prior month, and only crude petroleum prices increased over the time frame.
But on a year-over-year basis, prices for materials like iron and steel have grown 14% while new U.S. tariffs have increased prices for softwood lumber by more than 15%, according to an analysis of Bureau of Labor Statistics data by Associated Builders and Contractors (ABC).
“The construction industry benefited from a one-month reprieve in materials price increases in October, based on today’s release. The fact that materials prices have stabilized should be viewed as good news to the U.S. construction industry,” said ABC Chief Economist Anirban Basu. “Most stakeholders agree that labor costs will continue to rise as America hurtles toward full employment. Significant increases in materials prices would further squeeze construction firms’ profits margins, or alternatively would make it less likely that planned construction projects would move forward.”
So far this year compared to last, overall construction input prices have risen 4.3%, ABC said. Nonresidential input prices increased 4.1% since October 2016. This October, petroleum prices increased 6.6% and are up 7.7% so far this year.
– Nicholas Stern, managing editor