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Housing starts hit highest point in a decade

by  | Corporate
Posted:     Updated: Mar 20, 2017  13:40 ET
 
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If housing economists agree on one thing, it is that home inventories are too tight.

The problem is twofold. First, not enough Americans are putting up their existing homes for sale. The other problem is that builders haven’t produced enough new single-family homes over the past five years or so to keep up with demand.

Home construction

The problems are somewhat related. Because there aren’t enough new homes on the market, buyers have fewer choices in numerous metros and many have decided to stay put in their existing homes, which further contributes to the home-inventory crunch.

Last week brought some encouraging data on housing starts, however.

Single-family starts were estimated at an annual pace of 872,000, up 3 percent compared to the rate a year earlier and the highest annual pace since September 2007, the U.S. Census Bureau reported.

Overall, the annual pace of starts, including single-family and multifamily, increased to 1.29 million, which is 6.2 percent higher than in February 2016.

Other signs suggest that a greater pace of building is to come. Builder confidence, a reading of how likely builders are to proceed with more home construction, hit a 12-year high across the country in March, according to the National Association of Home Builders (NAHB).

The overall index rose by six points, to 71, the highest level since June 2005, NAHB reported. The index measures confidence in the current and future market for newly build homes, and the builders' perceptions of buyer traffic. An overall score of 50 or more suggests that the majority of builders view conditions favorably.

Although these trends were encouraging, NAHB Chief Economist Robert Dietz cautioned that there may also be some noise in the data. The higher housing-start number, for example, could be partly attributable to the warmer weather throughout the country.

“While builders are clearly confident, we expect some moderation in the index moving forward,” Dietz said. “Builders continue to face a number of challenges, including rising material prices, higher mortgage rates, and shortages of lots and labor.

Last week’s data also produced some mixed messages, according to an analysis by Trulia. Housing starts are still running well below what is considered a normal level, and are just under 64 percent of the 50-year average. Trulia also noted that permitting activity also fell over the month, a sign that building activity could slow down.

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Victor Whitman is chief reporter for Scotsman Guide Media. Reach him at (800) 297-6038 or victorw@scotsmanguidenews.com.

Topics: Residential economy | Residential lending
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Housing starts hit highest point in a decade

by Scotsman Guide Media | Corporate
Posted: Mar 20, 2017  13:37 ET    Updated: Mar 20, 2017  13:40 ET

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