Housing starts increase driven by single family residential
All signs point to more residential construction in 2017
Builders could be starting to move in the single-family residential market as demand for new housing grows.
Privately-owned housing starts increased in February 3% from January to 1.29 million, according to the latest report from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. This is an increase of 6.2% from last year. And this increase was driven by single-family housing starts, which increased 6.5% month-over-month.
Building permits, on the other hand, saw a decline in February. Privately-owned housing units authorized by building permits decreased 6.2% from January to 1.21 million, but remains 4.4% above February 2016.
One expert who formerly served as Fannie Mae’s chief economist for over 20 years, explained this increase should continue throughout the year.
“Total housing starts for February rose by nearly 3%, driven by a 6.5% increase in single-family units,” Nationwide Chief Economist David Berson said. “With home sales headed higher, builder confidence at the highest level since 2004, and relatively low levels of unsold homes, homebuilders should continue to increase the number of single-family starts over the course of the year.”
However, while building permits decreased overall, single-family authorization increased in February by 3.1% monthly.
And President Donald Trump’s new deregulation goals could bring relief to builders, especially when it comes to permitting, according to the National Association of Home Builders. Because of this, builder confidence recently soared to a 12-year high.
“All of the weakness in permits was in the more volatile multifamily sector, with single-family permits at the highest level since 2007 – again suggesting future strength in this sector,” Berson said.
And other experts echoed his statements, saying single-family construction will continue to rise.
“With homebuilder confidence at a 12-year high, partly down to an expectation that regulations will become less onerous, single-family starts are set to rise steadily over the next couple of years,” Capital Economics property economist Matthew Pointon said.
However, Trulia created a chart that shows the number of housing starts compared to the population, showing that the numbers are still historically low.
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“There is a long way to go before starts and completions are back to normal, with starts 66% and completions 60% of the 50-year average,” Trulia Chief Economist Ralph McLaughlin said.
Privately-owned housing completions increased 5.4% monthly to a seasonally adjusted rate of 1.11 million. This is 8.7% above last year’s rate. However, single-family housing completions sank 6.5% from January.