Multifamily weakness drives down US housing
According to the U.S. Department of Housing and Urban Development and the Commerce Department, a sharp decline in multifamily starts pushed overall housing production down 18.7 percent in November to a seasonally adjusted annual rate of 1.09 million units. Overall permit issuance was also down 4.7 percent.
“Year-to-date, single-family starts are up 9.6 percent and the overall trend in this sector remains positive,” said Ed Brady, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Bloomington, Ill. “Builder sentiment is strong and we can look forward to growth in the single-family market in the year ahead as the industry adds workers and lots and Washington policymakers provide regulatory relief for small businesses.”
“Single-family starts declined from a robust level in October but still remain very solid,” said NAHB Chief Economist Robert Dietz. “Though rising mortgage rates could be a headwind for housing, we expect single-family production to continue on a long-run, gradual growth trend. Meanwhile, the multifamily sector, which has been volatile in recent months, is expected to level off at a solid rate as that market finds balance between supply and demand.”
Single-family starts fell 4.1 percent in November to a seasonally adjusted annual rate of 828,000 units while multifamily production dropped 45.1 percent to 262,000 units.
Combined single – and multifamily starts fell in all four regions in November 2016. The Northeast, Midwest, South and West posted respective losses of 52.1 percent, 14.2 percent, 9.3 percent and 22.1 percent.
Single-family permits rose 0.5 percent to a rate of 778,000 units in November while multifamily permits dropped 13 percent to 423,000.
Permit issuance fell 8.3 percent in the Midwest, 4 percent in the South and 6.1 percent in the West. The Northeast posted a gain of 2.8 percent.
The National Association of Realtors Chief Economist Lawrence Yun also commented, “There’s little to cheer about regarding residential construction in November.”
Yun continued, “The fall in single-family housing starts offers zero relief to the housing inventory shortage throughout the country. Moreover, the collapse in multifamily starts assures continued robust growth in rents next year. Housing costs are rising and this trend will nudge up the broad consumer price inflation enough to surpass 3 percent next year, which is easily above the Federal Reserve’s desired inflation target. Soft housing starts also assure continued sluggish expansion in the overall economy.”