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State & National Updates
Eye on the Economy

Construction Surges in October

 

Single-family construction starts rallied in October, increasing nearly 11% to an annual rate of 869,000. Meanwhile, multifamily construction in October was also unusually strong. A gradually strengthening economy has led to a broadening of the types of residences being built, as depicted in the third-quarter data for the individual home building sectors:

  • Custom home building posted 49,000 starts—its best quarter since the recession.
  • Townhouse construction achieved a 12.4% share of the single-family market—near a cycle high.
  • Median single-family home size is trending down as more entry-level homes are constructed.
  • Rental housing continues to dominate, accounting for 92% of all new multifamily construction.

Overall growth helped support yet another strong level of builder confidence, according to this month's NAHB/Wells Fargo Housing Market Index. However, the surge from October is likely temporary. Single-family starts are expected to return to trend in the coming months, as will apartment construction while that market seeks a balance between supply and demand.

 

–NAHB Chief Economist Robert Dietz

 

Economic Conditions

 

Second Look at 3rd Quarter GDP Growth – Better, but Beware 

The upward revision was based mainly on faster growth in personal consumption expenditures. 

 

Review of November's FOMC Meeting: Not Much Clarity

Federal Open Market Committee now mulls the risks of moving too slowly.

 

Consumer Price Index Rose in October

Increasing energy prices accounted for most of the rise of inflation.

 

Industry Insights

 

Home Prices Jumped in September

The annual growth rate of 10.4% was the fastest in the past 36 months.

 

AD&C Lending Expands

Volume of residential construction loans grew to its highest rate since the summer of 2014.

 

Single-Family Built-for-Rent Construction Sees Growth

Current market share is higher than the historical average, but down from 2013 levels.

 

Steady Progress for New Homes Sales

Single-family home inventory stands at its highest level since the downturn.

 

Existing Sales Revive

October's sales pace of 5.6 million homes was the highest since February 2007.

 

NAHB Survey: AD&C Loan Standards Continue Easing 

However, the pace of easing slowed between the second and third quarters.

 

Housing Trends

 

Multifamily Construction Dominated by Rental Production

Multifamily developers expected to build more for-sale units in the years ahead. 

 

Post-Recession High Set for Custom Home Building

Starts totaled 49,000 in the third quarter.

 

Townhouse Construction in the 3rd Quarter

A gradual resurgence in market share is anticipated during the coming years.  

 

Single-Family Home Size Trending Lower

Average new homes slowly scaling back to their pre-recession size. 

 

Housing Starts Accelerate in October

A surge in single-family construction was coupled with a rebound in multifamily.

 

Positive Gains for the Apartment and Condo Market

Multifamily Production Index posted a three-point gain in the third quarter.