Housing Starts, Builder Confidence Surge

Single-family starts experienced continued gains in September, according to data from the U.S. Department of Housing and Urban Development and the Census Bureau reported by the National Association of Home Builders. While single-family permits are showing continued strength, multifamily permits continue to weaken as a consequence of the 2020 virus crisis.

Currently, 539,000 single-family homes are under construction, which is 3 percent higher than a year ago, despite the declines for construction starts in the Spring. At its peak level of decline in April, single-family starts were down 34 percent compared to the pre-recession peak in February.

The pace of single-family starts in September was the highest production rate since the summer of 2007. Single-family building increased to a 1.1 million seasonally adjusted annual rate. The September reading of starts was consistent with surging builder confidence, as reported in the latest NAHB/Wells Fargo Housing Market Index. The index increased two points in October, further surpassing the previous all-time high of 83 recorded in September. These are the first two months the index has ever been above 80.

Buyer traffic remains high and record-low interest rates are keeping demand strong, NAHB reports, but also notes it is becoming increasingly challenging to build affordable homes as shortages of lots, labor, lumber and other key building materials are lengthening construction times.