Housing supply is low, but the latest construction numbers may hold a silver lining.
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Overall housing supply dropped 11% last month, but according to the Census Bureau’s latest construction numbers, builders are finally stepping into help.
Today’s New Residential Construction Report shows that single-family building permits were up 6.4% in January and 20.2% over the year.
According to Danushka Nanayakkara-Skillington, assistant vice president of forecasting and analysis at the National Association of Home Builders, this is a “useful indicator of future construction activity” and falls in line with recent builder sentiments. The last three NAHB/Wells Fargo Housing Market Indices show builder confidence at its highest point since late 2017.
Though actual housing starts and completions were down slightly for the month, that’s not a huge surprise. December saw a 13-year high in terms of homebuilding, with starts up 16.9%. It was the largest gain for starts since October 2016.
Overall January starts were up 21.4% over the year, while completions jumped 1.5% for the same period. According to NAHB, the three-month moving average for single-family starts is now at its highest pace since the Recession.
Holden Lewis, a home and mortgage expert with NerdWallet, calls today’s data “a pleasant surprise.”
“Builders broke ground in January with vigor,” Lewis says. “Housing starts were much higher compared to a year earlier, which is a sign that housing shortages could ease in some markets when those homes are completed.”
Lewis is careful to note that housing shortages won’t end, but they “might be less bad” in some markets.
Redfin just reported housing supply at a mere 3.5 months. The number of active listings took their largest dip in nearly seven years last month, sinking to their lowest level since January 2013.
At the metro level, Tulsa, Okla., and Salt Lake City saw the biggest month-over-month decreases, with listings dropping 11.4% in both areas.