Even though home builder confidence has inched higher this fall, builders pulled back on new construction last month, with Housing Starts falling 1.8% from October. The decline in multifamily starts outweighed the increase in single-family homebuilding. Building Permits, which reflect future construction, were flat for single-family homes but rebounded for multifamily projects.
What’s the bottom line?
Housing Starts measure projects where ground has already been broken, so they are a good measure for upcoming supply. As of November, the annualized pace is 1.29 million. When we subtract roughly 100,000 homes that need to be replaced every year due to aging, we’re well below demand as measured by household formations that are trending at 1.9 millionas of the end of September. Again, the limited new supply on the market relative to household growth should continue to support home prices going forward.