November Housing Starts

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses the latest housing starts data.

  • Housing starts fell 3 percent in November from the prior month, settling at 861,000 units. Still, new construction activity marks the second highest level during President Obama’s term.
  • Single-family units fell 4 percent over the month (while up 23 percent from a year ago), while multifamily units declined 1 percent (up 19 percent from a year ago).
  • Household formation is finally bursting out this year after a prolonged period of suppression from 2008 to 2011. Based on current 1 million net new household formations, housing starts should be closer to the long-term historical average of 1.5 million new units. Today’s housing starts are well below that. So the decline in vacancy rates for apartments and single-family homes will continue to fall going into next year. Rent increases could therefore strengthen while home prices will move higher.

Lawrence Yun, PhD., Chief Economist and Senior Vice President

Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.

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