Hurricanes Spark Concern on Housing Starts
More single-family homes are in the pipeline, but the industry is skeptical about whether the increase will satisfy buyer demand. Single-family production increased 1.6 percent in August to a seasonally annual rate of 851,000, the Commerce Department reported Tuesday. Single-family production is now nearly 9 percent higher than a year ago. The uptick is welcome news to housing markets that are increasingly facing severe housing shortages, but the two recent hurricanes that struck the U.S. over the past few weeks could threaten progress.
“The three-month average for single-family production has reached a post-recession high, but the months ahead may show volatility given that the building markets affected by hurricanes Harvey and Irma represent about 14 percent of national production,” cautions Robert Dietz, the chief economist of the National Association of Home Builders.
Indeed, Lawrence Yun, the chief economist of the National Association of REALTORS®, says a further temporary setback to housing starts is likely on the horizon due to the impact of hurricanes Harvey and Irma on Texas and Florida.
“The shortage of labor in construction will further intensify as more workers concentrate on rebuilding rather than on new construction,” Yun says. “The nation’s housing shortage unfortunately looks to be with us well into the next year.”
Despite the increase in single-family starts last month, the multifamily market underperformed in August. Multifamily starts plunged 6.5 percent in August to 329,000 units. The decrease in the multifamily sector brought overall nationwide housing starts down 0.8 percent for the month to a seasonally adjusted annual rate of 1.18 million units, the Commerce Department reported.
Across the country, combined single- and multifamily housing production rose by the highest amount in the Midwest, increasing 22 percent month-over-month. The West also saw an increase in combined starts by 4 percent. However, housing starts dropped by 7.9 percent in the South and by 8.7 percent in the Northeast.
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