The momentum of construction activity continued in October, when the single-family homes reached their highest level since February, according to the Census Bureau and the Ministry of Housing and Urban Development.
Housing starts rose by 4.9% compared to September and by 14.2% compared to the previous year to a seasonally adjusted annual rate of EUR 1.53 million. Broken down by region, the South recorded an annual growth of 24.3%, the Midwest with 23%. The west grew 5.4% while the northeast fell 32.8%. The overall surge could potentially stem the spike in house prices by helping to increase the housing stock, which recently hit a 13-year low. Builders' sentiment also reached its all-time high in November, driven by robust consumer demand.
"With builders maintaining an incredible pace that has not been seen in years, realtors should take this as a clear sign that they will continue to support the buying customer for the rest of the year," said Austin Niemiec, executive vice president of Rocket Pro TPO said in a statement.
Permits, a barometer of upcoming construction, were around 1.55 million month-on-month – the highest level in 2020. This is an increase of 2.8% compared to October 2019. The approved permits that have not yet been launched , fell to 179,000 in October, a decrease of 0.6%. from September and 4.3% in the previous year.
Homes under construction rose to over 1.22 million, a monthly increase of 1.2% and an annual increase of 6%. Completed construction fell briefly to 1.34 million units and increased 5.4% compared to October 2019.
Although the majority of the indicators for an increase in the build-up are pointing upwards, there are still political and logistical hurdles to be overcome, as well as possible lockdowns due to the next wave of the pandemic.
"The real estate market today is characterized by robust demand, but there are not enough homes for sale," said Odeta Kushi, assistant chief economist at First USA. "Despite the record low inventory of existing properties for sale, construction activity has lagged. The construction industry is facing several supply-side headwinds: rising material costs (especially rising wood costs), chronic shortage of construction workers, lack of developable land, and restrictive regulatory requirements in many markets . "