The new construction markets are in a very interesting place, a fact reinforced by the latest Census Bureau numbers.
Housing starts in September were at a seasonally adjusted annual rate of 1.017 million, a 6.3 percent increase from August’s revised numbers and a hefty 17.8 percent increase from Sept. 2013, according to fresh numbers from the Census Bureau.
Of course, there are considerable nuances behind those increases, so we’ve dug beneath the surface and unearthed seven of the most valuable trends you should know for your real estate business:
1. Construction is Definitely Up – In past months, monthly variations were canceled out by longer-term averages, but for once, quarter numbers were consistent with monthly gyrations. In the third quarter, which September concluded, housing starts were up 16 percent over the same period in 2013.
2. Multifamily is Still King – Of course, the one truly thriving sector of housing – multifamily – has driven those double-digit increases; though single-family building is up 8 percent from 2013’s third quarter, multifamily building is up an amazing 34 percent.
3. History in the Making – Here’s how good multifamily construction is right now: at a rate of 353,000, multifamily building is at its highest level since Jan. 1990, aka nearly 25 years ago! Click here for a great graph on the trends.
4. Pie Share – Furthermore, multifamily has also taken up a greater share of the overall construction pie in each of the last six years; as this graph demonstrates, multifamily makes up 34 percent of construction in 2014, roughly double of its market share in 2009.
5. A Rental-Based Recovery – As great as those multifamily stats are, they require an essential clarification – 93 percent are intended for rent, so they’re unlikely to satisfy any inventory shortages on the listing side.
6. Single-Family Bouncing – Single-family construction was more of a mixed back; though quarterly starts were up 7 percent from last year, month-to-month numbers improved by just 1.1 percent, and permits are running just 0.8 percent above 2013’s levels.
7. Inventory Improvements? – As we hinted at before, there are no signs that home construction will save us from our inventory-shortage blues. Though overall housing completions were up 8.6 percent from August to September (and 31.3 from Sept. 2013), the vast majority of those increases are for the aforementioned multifamily sector. How much have single-family completions increased, you may wonder? Just 1.0 percent month-to-month.