Housing starts rose 9.8% in June, driven by the continued upswing in apartment construction (up 28.6%, and remaining volatile).
Single-family construction remained fairly flat (down 0.9%) by comparison. That said, builders are clearly expecting a steady increase in starts in the next 12 to 24 months, based upon the investments that are being made in land and lots. Single-family lot development is up 21.5% compared with a year ago, based on Metrostudy’s latest national research.
Part of the reason the number of single-family housing starts (a measure of production, not demand) is sluggish is the depletion of lot supplies in many of the most coveted locations around the country. The supply of new homes is still barely keeping up with demand. Finished new-home inventory is still at 2.5 months of supply, which is in the historically normal range, but somewhat low for a market that is starting to revive rapidly. This explains the high rate of price increases on new homes. As mentioned, builders and developers are pushing hard right now to get more homesites ready for construction in the months ahead.
Here are some of the markets that we have found are increasing single-family home production the most. You’ll notice that the former “bubble” markets figure prominently in this list, reflecting the fact that they had fallen so far during the downturn.
- Northern California: +46.3%
- Reno: +44.9%
- Las Vegas: +36.5%
- Naples/Ft. Myers: +27.4%
- Tampa: +15.4%
- Atlanta: +15.0%
- Denver/Co. Springs: +14.9%
(all quarterly data, construction of single-family detached homes, versus four quarters ago)
Today’s government release also showed that permitting is up for single-family as well as multifamily construction, which promises further increases in housing production in the last half of the year. Job growth is strengthening, mortgage rates remain low, and household formation rates are starting to increase. All of these bode very positively for increased housing demand for the remainder of this year and into 2016.
